Hester Bios Q1 FY27 earnings call

Hester Biosciences reported a strong Q1 FY27 on a standalone basis, with revenue from operations growing by 14% year-over-year. Profit After Tax (PAT) saw a significant increase of 88% compared to the previous year. Gross margins improved notably from 69% to 78%, supported by a favorable product mix and operational efficiencies. This led to a 95% growth in EBITDA, reflecting robust operating performance.

The Poultry Healthcare Division delivered an excellent quarter, recording a 48% growth year-over-year, driven by higher institutional business, deeper market penetration, and customer engagement. Early traction from new Poultry Health Products, including feed supplements and disinfectants, also contributed. Conversely, the Animal Healthcare Division continued to be impacted by timing delays in government-led immunization programs, such as PPR eradication and Lumpy Skin Disease Control Initiative, which affected Goat Pox vaccine sales.

Consolidated revenue declined by 8%, primarily due to lower revenues from Nepal and Africa operations. However, the company remains committed to its long-term strategy in these markets, focusing on registration and market development. A significant financial event was the reduction of an outstanding loan to Hester Africa from USD 12 million to USD 5 million. The accrued interest was waived, and the revised loan was made interest-free, reflecting the Gates Foundation's recognition of geopolitical challenges^🌐 in the region.

Innovation remains central to Hester's long-term strategy, with regulatory dossiers submitted in the animal health segment during the quarter. The company emphasizes sustained investment, regulatory discipline, and patience in R&D to expand its biological pipeline and build a differentiated portfolio across poultry and animal healthcare. Management believes these efforts will create future growth opportunities.

The company acknowledges that government tenders, particularly for animal health vaccines, can lead to unpredictable scenarios and timing delays. While committed to participating in these tenders due to their role in public health, Hester is also actively working to create direct demand with dairy farms to reduce sole reliance on tenders. Management views tender delays as timing-related^📎 rather than a reflection of underlying demand.

Hester Biosciences is currently operating its manufacturing facilities, including the BSL3 facility, at approximately 60-65% utilization. While specific percentages for the BSL3 facility are not disclosed, the company is actively working towards optimizing its utility. The focus remains on improving manufacturing infrastructure utilization and maintaining operational excellence to support sustainable long-term growth.