Hester Biosciences Limited — Q4 FY26

Hester Biosciences Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=OMT-Pl8e8Wg Published: 1d ago

0:00 Ladies and gentlemen, good day and welcome to the Hesto Biosciences Q4 FI26 earnings conference call hosted by ICA Securities. 0:10 10 seconds As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:20 20 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on your Touchstone phone. Please note that 0:29 29 seconds this conference has been recorded. I now hand the conference over to Mr. Daril Jen from ICIC securities. Thank you and over to you sir. 0:40 40 seconds Thank you Swapnali. Good afternoon everyone. On behalf of ICICA securities, I welcome you all on Q4 and FY26 0:49 49 seconds earnings conference call of Hester Biosciences Limited and I thank the Hester Biosciences Management team for giving us the opportunity to host this 0:57 57 seconds call. Today on this call we have with us Mr. Rajiv Gandhi CEO and managing director, Miss Priya Gandhi, executive 1:06 1 minute, 6 seconds director and Mr. Ashish Desai, Chief Financial Officer. I will now hand over the call to the Hester management team 1:13 1 minute, 13 seconds for their opening remarks. Thank you and over to you. 1:18 1 minute, 18 seconds Good afternoon everyone. This is Priya Gandhi. Thank you for joining us today to discuss Hester Biosciences Q4 and 1:25 1 minute, 25 seconds FI26 results. As always, we appreciate your continued engagement and long-term support as we continue building Hester 1:33 1 minute, 33 seconds with a clear focus on science, operational discipline, and long-term value creation. The past year has been 1:40 1 minute, 40 seconds an important phase of consolidation, operational strengthening, and capacity building for the company. While parts of 1:47 1 minute, 47 seconds business continue to face timing related tender delays and uneven market conditions, FYI26 1:54 1 minute, 54 seconds reflects visible improvement in execution, profitability, and strategic positioning across several areas of the organization. 2:02 2 minutes, 2 seconds On a standalone basis, the revenue for Q4 grew by 22% while PAT increased by 174%. 2:10 2 minutes, 10 seconds Um while standalone revenue remained flat for the entire financial year, the profitability improved significantly with a PAT up by 64%. 2:20 2 minutes, 20 seconds At the consolidated level, revenue grew by 22% in Q4 and 7% in the full year. Um 2:27 2 minutes, 27 seconds while PAT increased substantially in Q4 and for the full year, almost by 100% in the full year. 2:35 2 minutes, 35 seconds While profitability during the year also benefited from exceptional financial income about which I will be mentioning uh the overall improvement was supported 2:43 2 minutes, 43 seconds by stronger execution in the poultry healthcare business the available product mix and continued operational discipline. 2:50 2 minutes, 50 seconds Coming on to our poultry healthcare division the poultry healthcare division delivered a strong performance during the year growing by 41% in Q4 and 21% 2:59 2 minutes, 59 seconds for the entire financial year. growth was supported by deeper market penetration, expanded placement, stronger field execution and sustained 3:08 3 minutes, 8 seconds demand of our vaccine portfolio. During the quarter, we also received both the marketing and manufacturing licenses for 3:16 3 minutes, 16 seconds H9N2 aven influenza vaccines. This is an important milestone for Hester and further strengthens our biological portfolio in the poultry segment. 3:25 3 minutes, 25 seconds The H92 opportunity in India is expected to be largely driven by the private commercial poultry market where biocurity and disease preparedness continue to remain key priorities. 3:36 3 minutes, 36 seconds Export opportunities will evolve differently across countries depending on dis disease management approach and regulatory pathways. 3:44 3 minutes, 44 seconds In parallel, our technical teams have also developed an integrated avian influenza management approach covering vaccination, farm hygiene, bird immunity and environmental management solutions. 3:55 3 minutes, 55 seconds The objective here is to create a major holistic outcome oriented engagement model for farmers rather than viewing disease management through a single 4:04 4 minutes, 4 seconds specific product approach. We have also introduced complimentary health products focused on gut health to improve bird 4:10 4 minutes, 10 seconds immunity, farm and farm hygiene as a part of a broader disease management approach. This includes probiotics, disinfectant solutions aimed at 4:19 4 minutes, 19 seconds supporting better postvaccination outcomes and disease control at the farm level. 4:25 4 minutes, 25 seconds Along with this, we continue to invest our efforts in R&D and portfolio enhancement initiatives across vaccines and health products in line with 4:33 4 minutes, 33 seconds evolving field requirements and market opportunities. 4:36 4 minutes, 36 seconds Coming on to the animal healthcare division, the animal healthcare division continued to face delays in the tenderled immunization programs in the 4:44 4 minutes, 44 seconds year. uh however it is important for me to reiterate that these were simply timing related challenges and no issues in the demand 4:53 4 minutes, 53 seconds during Q4 execution under the national PPR uh immunization program did improve um and uh we have supplied 6.3 cr doses 5:02 5 minutes, 2 seconds in Q4 for PPR the overall animal healthcare performance for FI26 however continued to reflect the impact of 5:10 5 minutes, 10 seconds delayed tender program execution during the earlier part of the The pet care segment continues to scale gradually across selected therapeutic 5:19 5 minutes, 19 seconds and supplement products and remains a long-term strategic focus area for us. 5:23 5 minutes, 23 seconds Coming on to the international operations during the year, Hester continued to participate in the Galmid le vital to program which stands for 5:31 5 minutes, 31 seconds veterary innovations transforming animal health and livelihoods focused on vaccine awareness adoption and livestock health improvement initiative across the 5:40 5 minutes, 40 seconds continent of Africa. Our Africa strategy continues to evolve towards a more structured and selective execution with 5:47 5 minutes, 47 seconds stronger focus on registration, market development as well as R&D. 5:52 5 minutes, 52 seconds We expanded registrations across the key African markets during the year and strengthened our on ground presence through our country level team. 6:01 6 minutes, 1 second Animal healthcare continues to remain an important area of focus across the African continent given its direct linkage to food security and 6:08 6 minutes, 8 seconds livelihoods. While parts of the region witnessed temporary political and election related disturbances during the year, our long-term engagement across 6:16 6 minutes, 16 seconds the continent remains active. The PPR eradication programs in Africa continue to remain long-term in our long-term 6:24 6 minutes, 24 seconds initiative while demand visibility remains strong. Execution timelines continue to depend on country level rollout schedules. 6:33 6 minutes, 33 seconds During the year, we also undertook a partial divestment of our stake in Texas life sciences as a part of our of a 6:40 6 minutes, 40 seconds broader capital allocation and strategic focus exercise. Uh the exceptional item referred to earlier was related to this particular transaction. 6:49 6 minutes, 49 seconds Going forward, our priority remains centered on strengthening and scaling our core biologicals and vaccine business where we believe long-term 6:58 6 minutes, 58 seconds opportunities and synergies are significantly stronger. With respect to Nepal operations, we continue to closely monitor the business environment and 7:06 7 minutes, 6 seconds remain focused on strengthening operational stability and long-term sustainability. 7:12 7 minutes, 12 seconds Coming on to capacity expansion and manufacturing plant in India. During the year, we've capitalized our field finish as well as BSL3 facilities as a part of 7:21 7 minutes, 21 seconds our broader manufacturing and infra infrastructure expansion initiative. The fill finish facility significantly 7:28 7 minutes, 28 seconds enhances our drug product capacity and provides flexibility for future scaleups across domestic and export markets. With 7:36 7 minutes, 36 seconds respect to BSL3, we are also undertaking optimization initiatives aligned with our current um operational and scaleup 7:43 7 minutes, 43 seconds requirements with focus on improving utilization efficiency and operating cost over the long term. As we move into 7:51 7 minutes, 51 seconds financial year 27, our focus remains centered on disciplined growth, operational efficiency, and strengthening long-term business 7:59 7 minutes, 59 seconds resilience. Our strategic priorities remain clear. Strengthening biological portfolio across poultry and healthcare, 8:06 8 minutes, 6 seconds which which is our strength. Expanding market penetration across domestic and export markets. Improving product picks 8:13 8 minutes, 13 seconds and capacity utilization. continuing focus on operational discipline and working capital management, expanding scientific engagement and field 8:22 8 minutes, 22 seconds execution capabilities. At the same time, we remain mindful of external risks, including the volatility in 8:28 8 minutes, 28 seconds tender business timing and increasing raw material costs linked to the global geopolitical developments and supply chain disruptions happening currently. 8:39 8 minutes, 39 seconds While these may create periodic cost pressures, we continue to focus on operational efficiency and calibrate price actions wherever required. 8:48 8 minutes, 48 seconds Overall, FYI26 has been an important year of strengthening the foundation of the business. While several of the initiatives that we are working on are 8:57 8 minutes, 57 seconds long cycle in nature, we believe the operational groundwork, capacity expansion and strategic direction established over the past few quarters 9:06 9 minutes, 6 seconds position Hester more strongly for the years ahead. Thank you once again for your continued trust and support and we now look forward to taking questions. 9:16 9 minutes, 16 seconds Thank you very much. We will now begin with a question and answer session. 9:22 9 minutes, 22 seconds Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove 9:30 9 minutes, 30 seconds yourself from the question queue, you may press star then two. Participants, you are requested to use handsets while 9:37 9 minutes, 37 seconds asking a question. Before we proceed, ladies and gentlemen, in order to ensure that the management will be able to 9:45 9 minutes, 45 seconds address all the questions from the participants in the question queue, we request you to kindly limit your questions to two per participant. If you 9:54 9 minutes, 54 seconds have a follow-up question, please join the queue again. 9:58 9 minutes, 58 seconds We will now wait for a moment while the question assembles. 10:08 10 minutes, 8 seconds You may press star and one to ask a question. 10:17 10 minutes, 17 seconds We will take the first question from the line of Ankit Kenodia from Zen Nish. Please go ahead. 10:23 10 minutes, 23 seconds Thank you for taking my question and uh congratulations on good set of numbers. 10:28 10 minutes, 28 seconds Uh my first question is related to our African business. So uh I recently read a news article which talks about 10:37 10 minutes, 37 seconds Tanzania launches major livestock vaccination drive to protect rural livelihoods and it talks about the 10:45 10 minutes, 45 seconds five-year drive which aims to curb zunotic and transboundary diseases including anthrax fd and rift valley 10:53 10 minutes, 53 seconds fever. uh I think it would be great uh if uh uh you could throw more light in terms of how big that opportunity is for 11:02 11 minutes, 2 seconds us and how is the competition uh how is the competition space uh in Africa while we prepare for this 11:10 11 minutes, 10 seconds opportunity. Thank you. That is my first question. 11:15 11 minutes, 15 seconds Uh yeah this is Rajiv Gandhi. uh one is that Hester Africa is already 11:22 11 minutes, 22 seconds participating in the uh vaccine requirement for the for Tanzania where our plant is incidentally. We are in 11:31 11 minutes, 31 seconds touch with the government department uh regarding the vaccines which we are already producing. We are aware of their 11:38 11 minutes, 38 seconds need for some of the vaccines uh which we may which would be in our pipeline. 11:44 11 minutes, 44 seconds Some may not be in the pipeline but uh yes we are in touch with the government and we are working towards it. 11:52 11 minutes, 52 seconds Development and commercialization of vaccines does take a little time. 11:58 11 minutes, 58 seconds Therefore at the moment we have already launched the focus vaccines have already started supplying to the government 12:05 12 minutes, 5 seconds those vaccines and all the names that you have mentioned we are in discussions with them and FMD is something which uh 12:14 12 minutes, 14 seconds at the moment we are yet discussing but we have at the moment our priority is 12:21 12 minutes, 21 seconds all other vaccines right sir sir any uh you didn't uh touch upon uh uh competition. Uh are there 12:29 12 minutes, 29 seconds other players who are also uh competing with us uh for all these which you have uh just highlighted? 12:36 12 minutes, 36 seconds Uh three or four private animal vaccine producers in the continent of Africa and we are one of them. 12:46 12 minutes, 46 seconds Most of the governments do have their small stateowned vaccine comp manufacturing uh units. Most of the vaccines are imported at the moment. 13:00 13 minutes That was very helpful, sir. 13:03 13 minutes, 3 seconds My second question is related to I hope I'm audible. Yes, you're audible. 13:10 13 minutes, 10 seconds Yeah. Okay. So, some second question is probably it's a very nice question. Uh whatever vaccines we sell in Africa, do 13:18 13 minutes, 18 seconds we sell in USD or do we sell in the local currency over there? 13:24 13 minutes, 24 seconds USD even to major farmer groups and all there 13:32 13 minutes, 32 seconds invoicing to the other country is in US dollars and for the local it is a local currency 13:40 13 minutes, 40 seconds for local it will be okay yes and what would be the breakup between 13:48 13 minutes, 48 seconds local and uh other country I think we are getting too deep into these questions uh breakup etc etc. 14:00 14 minutes We are serving the continent. We have distributors in different countries. We are supplying to many countries besides Tanzania. 14:09 14 minutes, 9 seconds Thank you so much sir and all the best. 14:15 14 minutes, 15 seconds Thank you. A reminder to all you may press star and one to ask a question. 14:22 14 minutes, 22 seconds We will take the next question from the line of mother rati from counter cyclical investments. Please go ahead. 14:32 14 minutes, 32 seconds So firstly many congratulations for the uh for great uh numbers and all-time 14:39 14 minutes, 39 seconds high dividend also sir and it's very heartening to see that we have I guess done the highest ever poultry quarterly 14:47 14 minutes, 47 seconds revenue and the AITA margin also in at least this segment seems to have reached our previous levels. Sir, so now only 14:56 14 minutes, 56 seconds concern is that whether this is a one-off considering high uh broiler prices in the fourth quarter or sir you 15:04 15 minutes, 4 seconds see this trend continuing of 65 cr quart quarterly revenue in the poultry segment 15:10 15 minutes, 10 seconds with like 30s uh margins I mean it is our endeavor to continue 15:18 15 minutes, 18 seconds and as mentioned I think this year has been very uh you know we've been very focused on our bottom line so yes product mix and division wise poultry 15:27 15 minutes, 27 seconds has contributed in the bottom line but there are many other factors which we would like to retain and we hope to continue this trend. Yes, there are many 15:36 15 minutes, 36 seconds external forces which I mean will be very hard for us to really particularly name or really you know sort of predict 15:43 15 minutes, 43 seconds anything but the point is that this is a base and we want to sustain this. 15:49 15 minutes, 49 seconds uh also we have some uh write offs of around 6 and a half cr uh on account of 15:56 15 minutes, 56 seconds uh bad debts etc. So I mean and last year also we had 4.4 4 cr. So I mean it's a significant amount. Uh so any comments on that? 16:07 16 minutes, 7 seconds Yeah to answer. 16:09 16 minutes, 9 seconds See this is Ashish. Uh now one is mainly there is again the provision of uh datas as required and there are few old dates 16:18 16 minutes, 18 seconds which were nonrecurable which are identified and written off. So it comprises of uh that 16:28 16 minutes, 28 seconds understood. So going forward can we expect this to reduce? 16:35 16 minutes, 35 seconds Uh it's it is yeah definitely it may not be so alarming figure but of course uh it it depends but yeah we we our focus 16:42 16 minutes, 42 seconds will be there to reduce uh sir and also the balance sheet has delivered to quite a good extent despite the commissioning of the new facility. 16:51 16 minutes, 51 seconds So firstly that facility that has been commissioned in the last quarter. So have we been able to ramp up the 16:58 16 minutes, 58 seconds utilization of that and also our receivers of 92 crores on revenue of less than 300 crores seems to be quite 17:07 17 minutes, 7 seconds high. So any plans to reduce the working capital? Um can you please repeat the question? 17:15 17 minutes, 15 seconds Uh madam uh our receivable seems to be quite high and secondly the new recently 17:23 17 minutes, 23 seconds commissioned I guess BS BS4 facility or something like that which we uh got into during CO that has been commissioned. So 17:33 17 minutes, 33 seconds have we started ramping it up or is it still not being used 17:40 17 minutes, 40 seconds on the yeah on the receivable front? See we are working on this. However, in the last quarter Q the sales was about more 17:50 17 minutes, 50 seconds than 33% only in the last Q4. So the number has relatively jumped uh from the earlier Q the quarter number and we are 17:58 17 minutes, 58 seconds working on that to reduce the receivable overall the number of days and and also what is the intangible asset under development of 9.3 cr. 18:10 18 minutes, 10 seconds Um yeah Mr. Ashish will look that up and with respect to the BSLCD infrastructure as mentioned earlier in my talk you know 18:17 18 minutes, 17 seconds we are undertaking certain optimization initiatives they have to be in alignment with our current operational needs and 18:25 18 minutes, 25 seconds our current scale up requirements but uh yes we are mindful of wanting to fully utilize it and uh we are in process of 18:32 18 minutes, 32 seconds doing that and and also what's the net debt as of 31st March 18:47 18 minutes, 47 seconds We just uh referring to numbers. Just give us a minute. 18:52 18 minutes, 52 seconds Yeah, the 19:05 19 minutes, 5 seconds meanwhile uh madam I Hello. 19:13 19 minutes, 13 seconds Yes, you may proceed. 19:14 19 minutes, 14 seconds Yes. So, so madam, our animal health revenue fell year on year by 30%. Of course it is based on tender. So madam going forward what is the outlook for 19:23 19 minutes, 23 seconds F27 on the animal health care side and also if you could give us a overview about our subsidiaries whether are they 19:33 19 minutes, 33 seconds expected to break even in FY27 given what given what 19:40 19 minutes, 40 seconds okay uh speaking of the animal healthcare division uh yes your concern is valid and I had mentioned it in the previous quarters that uh the tender 19:49 19 minutes, 49 seconds related delays that were happening you know the the planning that we also had from the tender rollout to happen from 19:56 19 minutes, 56 seconds Q1 Q2 Q3 Q4 sort of didn't really go through and there are many various reasons for it reasons which are not even in our control however having said 20:05 20 minutes, 5 seconds that from Q4 it did start to pick up and you know these things sometimes they're not in our hands and speaking of the 20:13 20 minutes, 13 seconds non-tender business also um we are focusing on you know more market penetration and improve improving our uh 20:21 20 minutes, 21 seconds uh you know presence in the market. So uh yes Q this year has been a little bit hasn't gone as per plan with animal 20:29 20 minutes, 29 seconds health but we are going to recover it from this quarter onwards. 20:33 20 minutes, 33 seconds Ma madam my last question is that now we have an increasing base of uh pets in the country so and uh I understand they 20:40 20 minutes, 40 seconds are being vaccinated so what is our share in the pet vaccinations at the moment none because uh we don't 20:49 20 minutes, 49 seconds really have any uh commercialized vaccines in the pet division at the moment. 20:55 20 minutes, 55 seconds Okay madam uh uh that's all madam from my side. Thank you very much and best of luck. 21:03 21 minutes, 3 seconds Thank you. 21:08 21 minutes, 8 seconds Thank you. Before we take the next question, a reminder to all you may press star and one to ask a question. 21:16 21 minutes, 16 seconds We have the next follow-up question from the line of Ankut Canodia from Zen Nvesh. Please go ahead. 21:22 21 minutes, 22 seconds Thank you so much for allowing our followup. Uh sir and madam uh I think uh 21:29 21 minutes, 29 seconds what I can see over the long term uh the debt has consistently reduced over the last 2 three years and as we are 21:37 21 minutes, 37 seconds positioned in terms of our capacity which uh which is quite decent compared to what kind of ramp up we are expecting 21:45 21 minutes, 45 seconds the next 2 three years. So is it fair to assume that uh we will uh experience some operating leverage going forward if 21:54 21 minutes, 54 seconds the demand continues uh in the similar fashion because we have done a lot of we have taken a lot of uh cost optimization 22:02 22 minutes, 2 seconds exercise also in the last year and our debt has also come down and assuming that we don't need any fresh bed because we don't need any further capacity 22:10 22 minutes, 10 seconds expansion so is it uh fair to assume or am I wrong in saying 22:17 22 minutes, 17 seconds I think um uh I mean yes we have installed a lot of capacity and invest invested quite a bit. Uh we also have to 22:25 22 minutes, 25 seconds keep in mind that there are advancing and changing evolving regulatory requirements that keep coming year on year uh and also new technologies uh that keep coming which we want to adopt. 22:38 22 minutes, 38 seconds So keeping those things in mind there cannot be a definitive answer whether we will be allocating any more capital or this is it but for the moment uh yes we 22:47 22 minutes, 47 seconds have installed quite a bit of uh capeex and we aim to optimize the utilization. 22:54 22 minutes, 54 seconds Yeah, ma'am. Can you just throw a little more light on what kind of regulatory thing which you're talking about? Uh how does it impact our papers? If you can give some hypothetical example. 23:05 23 minutes, 5 seconds There cannot there is no hypothetical example. Regulatory processes 23:12 23 minutes, 12 seconds are time and again evolved from the drug department and uh one has to comply and 23:19 23 minutes, 19 seconds it is an evolving process all over the world. So it is difficult to hypothesize and tell what could come from the drug 23:28 23 minutes, 28 seconds department. So as you know there is progress in economies 23:36 23 minutes, 36 seconds you know everybody tries to aim for perfection. So more and more stringent rules come up more and and the word 23:43 23 minutes, 43 seconds stringent is because we have to change otherwise probably it is the path forward. So it's even a welcome step but 23:50 23 minutes, 50 seconds yes changes keep on coming and one cannot exactly foresee what will be the 23:56 23 minutes, 56 seconds investment required to overcome that sir 24:07 24 minutes, 7 seconds that's it for thank you thank you we will take the next question 24:17 24 minutes, 17 seconds from the line of dash Jen from ICA securities. Please go ahead. 24:24 24 minutes, 24 seconds Sir, so uh our revenue mix for FI26 was uh 7030 in the favor of poetry 24:31 24 minutes, 31 seconds healthcare and now that uh animal healthare Hello, am I audible? Yes, you're audible. 24:39 24 minutes, 39 seconds Yeah. And now that we expect a pick up in animal healthcare business going forward. So what can we assume has the 24:46 24 minutes, 46 seconds steady state uh revenue mix among the two segments. 24:52 24 minutes, 52 seconds Um uh there has been a time I think two years ago where both were almost 50% and that is what we are aiming at where we 25:00 25 minutes are not hyper dependent on any one division. Yes. But there are many other external factors that also play in. Um 25:08 25 minutes, 8 seconds speaking of last year yes the ratio is sort of skewed a little bit more towards poultry but uh moving forward even if we 25:15 25 minutes, 15 seconds talk about our pipeline etc we have more focus on the animal health division and biologicals in animal health. So in the 25:23 25 minutes, 23 seconds coming times we do see that division also picking up as well. 25:29 25 minutes, 29 seconds Okay and uh just one uh question regarding net death. So uh at what number of at what uh ratio of net debt 25:37 25 minutes, 37 seconds to uh equity would be comfortable at going forward? 25:43 25 minutes, 43 seconds The currently s the debt is around 70 crores right is reduced from 102 crores. 25:49 25 minutes, 49 seconds Okay. So I think this is uh the debt to equity is currently 19 from what it has reduced. So I think this is quite 25:56 25 minutes, 56 seconds comfortable for us at the at this level. 26:03 26 minutes, 3 seconds Okay, thank you. 26:10 26 minutes, 10 seconds Thank you very much. As there are no further questions from the participants, I now hand the conference back to the management for the closing comments. 26:19 26 minutes, 19 seconds Thank you. 26:23 26 minutes, 23 seconds So, uh yes. So, thank you everyone for joining and hearing us out. Uh I hope that we have answered your questions. If there are any other questions, we would 26:32 26 minutes, 32 seconds be happy to take it offline. As mentioned the last year we were working very hard on strengthening the foundation of our business and that 26:40 26 minutes, 40 seconds pretty much has sort of reflected in terms of how the bottom line performance is showing and uh yes as mentioned 26:47 26 minutes, 47 seconds earlier quite a few of the initiatives that we embarked on are a little bit long-term and long cycle in nature and I'm pretty confident that uh it will 26:56 26 minutes, 56 seconds show us uh even better results in the times to come and just thankful for all the support and trust from everyone That's it. Thank you all. 27:07 27 minutes, 7 seconds Thank you members of the management. On behalf of ICA securities, we conclude this conference. Thank you all for joining us and you may not disconnect your lines. Thank you.