Hester Bios

Hester Biosciences reported a mixed Q3 FY25, with consolidated divisional product sales declining by 6% for the quarter. However, for the nine-month period, consolidated divisional product sales increased by 2%, and consolidated profit grew significantly by 85% compared to the previous year. This profit growth was primarily driven by improved operational efficiencies and unrealized foreign exchange gains in the African subsidiary. Standalone PAT, however, saw a decline of 31% in Q3, while consolidated EBITDA grew by 12% in Q3 and 15% for the nine months.

The Animal Health System division experienced a significant 24% decline in sales during Q3, although it maintained a 4% growth for the nine-month period. This downturn was attributed to several external factors, including an earlier-than-expected end to the monsoon season in some regions and lower milk prices, which reduced farmers' spending on essential animal healthcare. Additionally, a regulatory ban on Nimesulide, an active ingredient in one of the company's products, led to a recall from the market, with an estimated financial impact of 5-6 crores in Q3. A new replacement product is in development and expected to mitigate this impact in coming quarters.

In contrast to Animal Healthcare, the Poultry Healthcare division delivered robust performance, with sales increasing by 12% in Q3 and 20% over the nine-month period. This growth was primarily driven by strong vaccine sales, which grew by 20% in Q3 and 27% in the nine months. The company highlighted rising awareness of Newcastle Disease and Marek's Disease prevention as key contributors. Hester Biosciences also announced plans to launch a vaccine against Avian Influenza in the coming financial year, which is expected to further boost this division's performance.

The Petcare division, though still nascent, continued its strong growth trajectory, achieving an impressive 105% growth in Q3 and 38% for the nine months of FY25. This growth was attributed to a strategic focus on key brands, seasonal product demands, and the successful launch of a new Pet food range in Q2. Management emphasized the significant growth potential of this division and its commitment to expanding its presence in the Petcare market.

Hester Nepal reported a net profit of Rs. 1.87 crores for the nine months and remains debt-free. Hester Africa significantly reduced its losses to Rs. 0.57 crores in nine months, a substantial improvement from Rs. 13.5 crores in the same period of FY24. This improvement was partly due to an unrealized foreign exchange gain resulting from the Tanzanian shilling's appreciation against the US dollar. Management expressed strong confidence in the African business, anticipating a 'very big leap' in the next two quarters through increased participation in international tenders and trade sales, including a confirmed vaccine supply to the Tanzanian Ministry.

The company reported approximately 70% capacity utilization in India for the nine-month period, with Nepal at around 20% and Africa at 10%, indicating sufficient capacity for future growth. While management refrained from providing specific financial guidance for FY26 and FY27, they reiterated their focus on improving the bottom line, enhancing operational efficiencies, and expanding their product mix, particularly in the Poultry Healthcare segment. The company aims to substantially increase its health products turnover, potentially exceeding vaccine sales in the coming years, and leverage its comprehensive range of animal vaccines as a key differentiator.