Hester Bios — Q3 FY26 earnings call

Call held 2 Feb 2026

Management summary

Hester Biosciences reported a strong Q3 FY26 with stand-alone revenue growth of 12% and a significant 140% increase in PAT, primarily driven by the robust performance of its Poultry Healthcare division. The company also achieved a key regulatory milestone for its H9N2 Avian Influenza vaccine. However, the Animal Healthcare division faced headwinds with a 38% decline in Q3 due to delays in government immunization programs and seasonal factors, though management expects improved momentum in Q4.

Highlights

  • Q3 stand-alone revenue grew by 12% driven by favorable product mix and cost discipline.

  • Q3 stand-alone PAT increased sharply by 140% year-on-year.

  • Poultry Healthcare division delivered a strong performance, growing 32% in Q3 and 17% over 9 months.

  • Consolidated revenue grew by 22% in Q3.

  • Received marketing and manufacturing licenses for H9N2 Avian Influenza vaccine, strengthening the poultry portfolio.

Concerns

  • Animal Healthcare division recorded a 38% decline in Q3 and 40% over 9 months.

  • 9-month stand-alone revenue was down by 5%.

  • Delays in government-led immunization programs (PPR and goat pox vaccine) impacted Animal Health.

  • Seasonal factors, including lower incidence of clinical cases and higher feed costs, affected the Ruminant business.

Key financials

2 periods

Headline

  • Stand-alone Q3 Revenue Growth
    12%
    YoY +12%
  • Stand-alone Q3 PAT Growth
    1.4%
    YoY +140%
  • Stand-alone 9M Revenue Growth
    -5%
    YoY -5%
  • Stand-alone 9M Profit Growth
    16%
    YoY +16%
  • Consolidated Q3 Revenue Growth
    22%
    YoY +22%

9M

  • Africa Revenue
    ₹27.5 Cr

What they filed

Q1 FY27: revenue down 8.3%, net profit up 470.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue84 63 82 84 71 −15%77 +22%100 +22%77 −8%
EBITDA19 5 19 23 12 −37%18 +260%34 +79%23 +0%
Net profit8 11 2 17 14 +75%9 −18%17 +750%97 +471%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Poultry Healthcare
    32% Q3 Growth17% 9M Growth
  • Animal Healthcare
    -38% Q3 Decline-40% 9M Decline
  • Petcare
    5% Share of Animal Healthcare Revenue

Capital allocation

medium confidence
  • Capex ₹182 Cr
    • Capitalized fill/finish facility, doubling drug product capacity
    • Support scale-up across products and markets
    As discussed earlier, some of you have asked about the status on our INR182 crores capital work in progress. During the quarter, I'm happy to share that we capitalized our fill/finish facility, effectively doubling our drug product capacity. The remaining CWIP will -- is expected to be capitalized over the coming months. Our capex has been structured in phases to support scale-up across products and markets, with returns expected to accrue progressively as the utilization increases.

Guidance & targets

Profitability

  • Quarterly EBITDA Profitability · Year-on-year basis · Medium confidence Higher than INR 20 crores
    Not specific, but we can expect to be on a higher trajectory. That would be a fair understanding? I think at the you can say that on a year-on-year basis, we will be doing better on a quarter-to-quarter basis such trajectory should not be measured. I think it's the year-on-year, definitely, we will be on a higher trajectory.

    — Rajiv Gandhi

Animal Healthcare

  • PPR and Goat Pox Immunization Program Commencement Animal Healthcare · Q4 FY26 · High confidence Commence from February 2026
    execution under the National PPR Immunization Program and Goat Pox Program to immunize against LSD is expected to commence from February 2026 and we anticipate improved momentum in the latter part of the financial year, which is Q4.

    — Priya Gandhi

  • Momentum Animal Healthcare · Q4 FY26 · High confidence Improved momentum
    we anticipate improved momentum in the latter part of the financial year, which is Q4.

    — Priya Gandhi

Poultry Vaccine Portfolio

  • H9N2 Avian Influenza Vaccine Impact Poultry Vaccine Portfolio · Ongoing · High confidence Strengthens portfolio and positions well for domestic and export opportunities
    This further strengthens our Poultry Vaccine portfolio and positions us well for both domestic and export opportunities.

    — Priya Gandhi

Petcare Segment

  • Share of Animal Healthcare Revenue Petcare Segment · Long-term · Medium confidence Increase substantially
    While still it is an early stage, Petcare remains a strategic focus area for us. We are exploring pet vaccine opportunities for India as well as Africa using our existing facilities without any incremental capex also evaluating potential licensing opportunities as a part of our sales long-term approach in Petcare.

    — Priya Gandhi

Business Strategy

  • Dependence on Tender-Driven Revenues Business Strategy · Long-term · High confidence Reduce dependence
    Our strategic priorities remain clear to reduce dependence on tender-driven revenues and deepening our presence across commercial and export markets, to leverage our expanded manufacturing capacity to support future growth, to strengthen our poultry vaccine portfolio, including Avian Influenza preparedness to continue investing in innovation with a long-term disciplined approach.

    — Priya Gandhi

Innovation

  • Investment in Innovation Innovation · Long-term · High confidence Continue investing
    to continue investing in innovation with a long-term disciplined approach.

    — Priya Gandhi

What to watch in Q4 FY26

PPR and Goat Pox Immunization Program Commencement

Q4 FY26 (February 2026)
Current Expected to commence from February 2026
Target Actual commencement and initial impact on Animal Health revenue

Why it matters

This program is expected to drive improved momentum in the Animal Healthcare division, which saw significant declines this quarter.

execution under the National PPR Immunization Program and Goat Pox Program to immunize against LSD is expected to commence from February 2026 and we anticipate improved momentum in the latter part of the financial year, which is Q4.

Risks & concerns

  • Delays in government-led immunization programs

    medium

    Timing delays in PPR and goat pox vaccine programs impacted Animal Health division, causing a 38% decline in Q3.

    Management acknowledged

  • Geopolitical/Operational challenges in Africa and Nepal

    medium

    Elections and temporary disturbances in Tanzania, and a challenging phase in Nepal operations, impacted regional performance.

    Management acknowledged

  • Seasonal factors impacting Ruminant business

    low

    Lower incidence of clinical cases, higher feed costs, and reduced cooperative milk prices affected purchasing behavior.

    Management acknowledged

  • Cyclical nature of Animal Health/Poultry business

    low

    The business is inherently seasonal, with Q3/Q4 typically strong for Poultry, and Q1/Q2 for Ruminant, but management aims for growth despite cycles.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Sustainability of INR 20 crores quarterly EBITDA Partial
Not specific, but we can expect to be on a higher trajectory. That would be a fair understanding? I think at the you can say that on a year-on-year basis, we will be doing better on a quarter-to-quarter basis such trajectory should not be measured. I think it's the year-on-year, definitely, we will be on a higher trajectory.

Analyst questioned if the current profitability level is sustainable, and management clarified it's a year-on-year improvement goal rather than quarter-on-quarter.

Asked by Madhur Rathi

Commercialization of fill/finish facility and depreciation impact Direct
See, the depreciation will come into effect because it was just capitalized at the end of the Q3. The impact will come in this Q4 now. So you might not see the impact because it is just capitalizing last quarter, Q3, the last days of Q3.

Clarified the timing of depreciation impact from the newly capitalized facility, which affects future profitability.

Asked by Madhur Rathi

Scale-up plan for new facility and product strategy Direct
To answer your question simply, it will be right now to cater to the existing products, maybe we will look at more export markets that we will be able to fulfill through this increased capacity.

Provided insight into how the doubled capacity will be utilized, focusing on existing products and export expansion.

Asked by Madhur Rathi

Export strategy (contract manufacturing vs. own brand) Direct
No, none of that at the moment. We want to retain our brand, and we will be Hester will only be exporting this. Yes, the way it is going on right now.

Management confirmed their strategy to export under their own brand, not through contract manufacturing, indicating brand focus.

Asked by Madhur Rathi

Poultry segment margin sustainability and product mix Partial
It's -- this is all driven by the product mix that we choose and the profitability of the products. So it's basically a mix of these 2 things, and that is what it is. We are conscious to improve the bottom line. And therefore, on a quarter-to-quarter basis, we try to budget and try to push products wherein it impacts our profitability positively.

Analyst questioned the sustainability of high Poultry margins; management explained it's due to product mix optimization and a conscious effort to improve the bottom line, with year-on-year consistency.

Asked by Ravi Mehta

Market size and scaling of H9N2 vaccine Evasive
Really honestly speaking, it is very, very difficult to get one number and give it to you right now that this is the market size, it's not as organized data not organized. All we can tell is it's a very, very important disease and it is a cause of a lot of challenges in Poultry. And it is an upcoming market.

Management could not provide specific market size numbers for the new H9N2 vaccine, indicating uncertainty despite its perceived importance.

Asked by Ravi Mehta

Size of Petcare business within Animal Health Direct
It's under 5% of the Animal Healthcare number.

Provided a quantitative estimate of the Petcare segment's contribution, highlighting its nascent stage and potential for growth.

Asked by Ravi Mehta

Strategy to reduce dependence on tender-based revenues Direct
This is an ongoing process. It is our endeavor. Now sometimes it may happen that we get very good tender business and the tender business may again seem to be higher. But yes, over a long period of time, we definitely would want to reduce the stress on the tender business.

Management reiterated its strategic priority to reduce reliance on tender business, explaining the ongoing nature of this transformation.

Asked by Harshal Mehta

3 min read 7 chapters

Detailed narrative

Strong Q3 Performance Driven by Poultry Healthcare

Hester Biosciences delivered a robust Q3 FY26, with stand-alone revenue growing by 12% and PAT surging 140% year-on-year. This strong performance was primarily fueled by the Poultry Healthcare division, which achieved a 32% growth in Q3 and 17% over the nine-month period. Growth was supported by deeper market penetration, improved placement, stronger distribution coverage, and sustained demand for the core vaccine portfolio. Consolidated revenue also saw a healthy 22% increase in Q3.

Challenges in Animal Healthcare Due to Institutional Delays

In contrast to Poultry, the Animal Healthcare division experienced a significant decline, recording a 38% drop in Q3 and 40% over nine months. This was largely attributed to timing delays in government-led immunization programs, particularly for PPR and goat pox vaccines. Management clarified these are timing delays, not demand issues, with execution expected to commence from February 2026, anticipating improved momentum in Q4. Additionally, seasonal factors and reduced cooperative milk prices impacted the Ruminant business.

Strategic Milestone: H9N2 Avian Influenza Vaccine

Post-quarter end, Hester achieved a crucial regulatory milestone by receiving both marketing and manufacturing licenses for its H9N2 Avian Influenza vaccine. This low-path AI vaccine is expected to significantly strengthen the company's Poultry Vaccine portfolio, positioning it well for both domestic and export opportunities. This is part of a broader integrated Avian Influenza Management approach, addressing biosecurity, bird immunity, and environmental management.

Capital Expansion and Capacity Doubling

The company capitalized its fill/finish facility during Q3, effectively doubling its drug product capacity. This is part of an INR 182 crores capital work in progress, with the remaining CWIP expected to be capitalized in the coming months. This capex has been structured in phases to support scale-up across products and markets, with returns expected to accrue progressively as utilization increases.

Focus on Profitability and Product Mix Optimization

Management emphasized a conscious effort to improve the bottom line, driven by an optimized product mix and sustained cost discipline. For the 9-month period, profits increased 16% despite a 5% revenue decline, reflecting operating discipline. While quarter-on-quarter profitability can fluctuate due to seasonal changes, the company is determined to maintain and improve its current quarterly EBITDA of approximately INR 20 crores on a year-on-year basis, aiming for a higher trajectory.

Strategic Shift: Reducing Tender Dependence

Hester is actively pursuing a long-term strategy to reduce its reliance on tender-driven revenues. This involves deepening its presence in commercial and export markets, increasing direct reach to private dairy farms, and leveraging expanded manufacturing capacity. The company aims to build a more balanced and resilient business model, moving away from opportunity-led participation to structured execution, particularly in regions like Africa, where 9-month performance remained positive despite Q3 challenges.

Petcare Segment and African Operations

The Petcare segment, currently contributing under 5% of Animal Healthcare revenue, is in a nascent stage but remains a strategic focus area with plans for substantial growth. In Africa, while Q3 was impacted by institutional order delays and higher operating costs, the 9-month performance remained positive. Hester continues to prepare as a global supplier for PPR eradication programs, with an evolving strategy focused on working capital discipline and selective geographic exposure, despite temporary disturbances in parts of Tanzania.

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