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.