Hester Bios — Q4 FY25 earnings call

Call held 9 May 2025

Management summary

Hester Biosciences reported robust profit growth for Q4 and FY25, with standalone profit up 30% and 17% respectively, and consolidated profit up 36% for FY25. This was driven by improved operational efficiency, cost control, and a better product mix, leading to an 8% increase in EBITDA. While overall revenue was flat due to a high base from a prior-year one-time export, underlying divisional product sales grew by 12%. The company is focusing on expanding its Animal Health and Pet Care portfolios and growing its international presence, particularly in Africa, where losses were significantly reduced.

Highlights

  • Standalone profit grew by 17% for FY25 and 30% in Q4.

  • Consolidated profit increased by 36% in FY25, reflecting benefits of operational improvements and cost management initiatives.

  • Divisional product sales (excluding one-time export) increased by 12%.

  • Animal Health and Pet Care combined division recorded 8% growth in Q4 and 6% in FY25.

  • EBITDA increased by 8%, reflecting better capacity use and expense discipline.

  • Hester Nepal delivered a stable net profit of Rs. 1.2 crore in FY25.

  • Hester Africa significantly reduced its net loss to Rs. 10.2 crores in FY25 compared to Rs. 18 crores in the prior year.

Concerns

  • Overall revenue appeared flat compared to last year due to a one-time pharmaceutical export sale in the prior year.

  • Hester Africa continued to incur a net loss of Rs. 10.2 crores in FY25.

  • Nepal revenues showed significant year-on-year volatility in Q4, with an analyst noting an 85% decline, though management attributed this to the lumpy nature of tender business.

Key financials

  1. Hester Nepal Net Profit ₹1.2 Cr
  2. Hester Africa Net Loss ₹10.2 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

  • Animal Health & Pet Care (Combined)
    8% Growth Q46% Growth FY25

Capital allocation

high confidence
  • Capex Capex disclosed
    • Maintenance
    • Fill finish activity capitalization
    • BSL-3 facility commissioning
    For the CAPEX, right now there is not much plan on it. As mentioned earlier, our fill finish is going to get commercially used now by Q2, latest Q3. And apart from that, we are just planning on our CAPEX plans. It's right now mostly to do with maintenance, etc.
  • Debt Debt disclosed
    • Repayment Debt reduced on a consolidated basis compared to March '24, managed from operations. ₹32 Cr
    It's good to see that you have reduced your debt by Rs. 32 crores in March '25 on a consolidated basis compared to March '24.
  • Liquidity Liquidity disclosed Cash generated from operations was roughly around Rs. 70 Cr. No new working capital add-on envisaged.
    So if you see our cash flow for the year ended March '25, I think the cash generated from the operations are roughly around Rs. 70 Cr. So I think we are able to manage right now the repayment which is for the current debt from our operations only. I do not envisage, frankly speaking, any new working capital add on looking at the current situation.

Guidance & targets

Capacity

  • Fill finish activity capitalization Capacity · Q2 FY26 · High confidence By Q2 this year
    And for fill finish activity, the expected timeline to have a capitalization is by Q2 this year considering the remaining batches to be commercialized and the regulatory approvals in the place.

    — Divyesh Maru

  • New plant utilization Capacity · By 3 years' time · Medium confidence Good level of production (60-70%)
    Slowly it will grow utilization from 10% to 30% to 60% to 70%. So it's a progression through which we are going. We are reasonably sure that by the time it is 3 years' time, we should be reaching a good level of production from the new plant.

    — Rajiv Gandhi

Profitability

  • Hester Africa breakeven Profitability · By FY27 · Medium confidence 2 years
    We hope that not this year, the next year, we hope two years we should take to breakeven at Hester Africa

    — Rajiv Gandhi

  • Hester Africa accumulated losses recoupment Profitability · FY28-FY29 · Medium confidence 1-2 years more than breakeven
    for accumulation to be recouped, I think will be needing 1 or 2 more years more than the 2 years, that is the projection I can give.

    — Divyesh Maru

  • Net margin level Profitability · Long-term endeavor · Medium confidence 25%
    Definitely. And that is our endeavor. This year, as you can see, has been a strong base in wanting to reach that level.

    — Priya Gandhi

Product Launch

  • Avian Influenza vaccine launch Product Launch · Q2 FY26 · High confidence Beginning of Q2
    We have always maintained Q2. If I have mentioned Q1, I probably don't recollect. But yes, it would be the beginning of Q2 for sure.

    — Rajiv Gandhi

Market Size

  • India H9N2 market size Market Size · Current · Medium confidence Rs. 80-100 crore
    In India, I think the H9N2 market I am not sure totally but it would definitely be approximately say Rs. 100 crore, around Rs. 80 crores to Rs. 100 crore market and world market is much bigger than that.

    — Rajiv Gandhi

Revenue

  • Clarity on BSL-3 facility revenue potential Revenue · Within this quarter or next quarter · High confidence Clarity provided
    it would be very inappropriate to give any figure at this point of time and I think this we should get clarity within this quarter or the next quarter and that is the time when we will probably give our plan as even accepted by the government because BSL-3 facility was created under the COVID Suraksha program.

    — Rajiv Gandhi

What to watch in Q1 FY26

Fill Finish Activity Capitalization

Q2 FY26
Current Undergoing remaining batches and regulatory approvals
Target Capitalized and commercially used

Why it matters

This facility is part of the Rs. 176 Cr CWIP and its commercialization is key for new product manufacturing and revenue generation.

And for fill finish activity, the expected timeline to have a capitalization is by Q2 this year considering the remaining batches to be commercialized and the regulatory approvals in the place.

Risks & concerns

  • Revenue volatility in Nepal due to lumpy tender business

    medium

    Nepal plant's objective is tender business, leading to surges and falls in revenue, making YoY comparisons difficult.

    Analyst acknowledged

  • Geopolitical reasons and market education slowing tender business in Africa

    medium

    Geopolitical reasons and the need to educate the market are delaying tender opportunities in Africa, impacting the breakeven timeline.

    Management acknowledged

  • Regulatory complexity and time for product registration in Africa

    medium

    Africa is 52 countries, each with different registration regimes and costs, taking up to 2 years per product.

    Management acknowledged

  • Foreign exchange availability issues in Egypt impacting collaboration

    low

    Collaboration with Novapharma in Egypt is at status quo due to Egypt's foreign exchange availability issues.

    Management acknowledged

Q&A highlights

5 direct, 2 evasive
Hester Africa Breakeven Timeline & Capacity Utilization Direct
We hope that not this year, the next year, we hope two years we should take to breakeven at Hester Africa because the African market as you understand is a very different market.

Provides a specific timeline for a key international growth market that is currently loss-making, highlighting market challenges.

Asked by Gunit Singh

New Capacity (CWIP Rs. 176 Cr) Optimal Utilization Direct
Slowly it will grow utilization from 10% to 30% to 60% to 70%. So it's a progression through which we are going. We are reasonably sure that by the time it is 3 years' time, we should be reaching a good level of production from the new plant.

Gives a phased outlook on the ramp-up of new capacity, crucial for future revenue growth and operational efficiency.

Asked by Gunit Singh

Capacity Utilization Across Geographies Evasive
We would not have that data ready with us while we are sitting, on the capacity utilization exact figures. So it would be inappropriate to give you any approximate figures.

Management was unable to provide specific capacity utilization figures, which can be a key metric for assessing efficiency and future growth potential.

Asked by Utsav Adani

Hester Africa Accumulated Losses & Breakeven Direct
total accumulated losses at Africa is roughly around Rs. 45 Cr. that is accumulation but as we mentioned that in 2 years will be at a breakeven and for accumulation to be recouped, I think will be needing 1 or 2 more years more than the 2 years, that is the projection I can give.

Quantifies the historical losses in a key growth market and provides a timeline for both breakeven and recouping past losses, indicating the long-term investment required.

Asked by Manish Jain

Reaching 25% Net Margin (Historical Level) Direct
Definitely. And that is our endeavor. This year, as you can see, has been a strong base in wanting to reach that level.

Indicates management's aspirational target for profitability, aligning with historical performance and suggesting confidence in current strategies to improve margins.

Asked by Manish Jain

H9N2 Vaccine Export Countries & Market Potential Partial
It would be inappropriate for me to really give you names of countries where we would be exporting because that's our business and we are in a competitive environment... In India, I think the H9N2 market I am not sure totally but it would definitely be approximately say Rs. 100 crore, around Rs. 80 crores to Rs. 100 crore market and world market is much bigger than that.

Highlights the competitive nature of the vaccine market and provides an estimated market size for a new product, while also showing management's reluctance to disclose specific market expansion plans.

Asked by Rishabh Shah

BSL-3 Facility Revenue Potential Evasive
it would be very inappropriate to give any figure at this point of time and I think this we should get clarity within this quarter or the next quarter and that is the time when we will probably give our plan as even accepted by the government because BSL-3 facility was created under the COVID Suraksha program.

Management deferred providing revenue projections for a significant new facility, indicating uncertainty or pending approvals, but promised clarity soon, making it a key item to monitor.

Asked by Madhur Rathi

Impact of Reduced Cattle Semen Cost on Vaccine Demand Direct
This dairy and all, if it grows, it can help in marginally increase because mean even if they get into it, how many cows or buffaloes will they keep? ... Even if they go up by 10,000, it is 10,000 doses. We are talking of doses in millions and billions. So we are happy that if there are such opportunities that come up in our own state, but it's the total country that we are looking at.

Clarifies that a seemingly positive development in the dairy sector would have only a marginal impact on the company's vaccine demand due to the vast scale difference in doses.

Asked by Madhur Rathi

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Detailed narrative

Q4 & FY25 Financial Performance Overview

Hester Biosciences reported a strong financial performance for Q4 and FY25, with standalone profit growing by 17% for the full year and 30% in Q4. Consolidated profit saw a significant increase of 36% in FY25. While overall revenue appeared flat year-on-year due to a one-time pharmaceutical export sale in the prior year, the underlying divisional product sales demonstrated a healthy 12% growth. The company also achieved an 8% increase in EBITDA, reflecting improved operational efficiency and cost control.

Operational Efficiency and Profitability Initiatives

A key focus for FY25 was enhancing operational efficiency, which directly contributed to stronger margins and profits. Initiatives included improving production performance, reducing wastage, optimizing inventory control, and prioritizing higher-margin products. The company also carefully managed administrative and overhead costs, leading to stable standalone gross-profit margins and a determined effort to reach a 25% net margin level in the future.

Divisional Performance Highlights and Product Pipeline

The combined Animal Health and Pet Care division recorded an 8% growth in Q4 and 6% in FY25, driven by stable demand for Goat Pox and PPR vaccines and increasing prescription-driven sales in Pet Care. The Poultry Healthcare division maintained positive momentum with strong vaccine sales and the launch of new feed supplements and disinfectants. Preparations for the Avian Influenza vaccine launch are progressing well, with commercial availability expected by the beginning of Q2 FY26, positioning it as a key growth driver.

International Business Performance and Strategy

International subsidiaries showed mixed but improving results. Hester Nepal delivered stable net profits of Rs. 1.2 crore in FY25, primarily from tender business. Hester Africa significantly reduced its net loss to Rs. 10.2 crores in FY25, down from Rs. 18 crores in the previous year, backed by strong sales and tender wins for PPR & CBPP vaccines. The company expects Hester Africa to breakeven within two years and recoup accumulated losses of approximately Rs. 45 crores within 3-4 years, focusing on expanding its presence in Africa, Asia, and the Middle East.

Capital Expenditure and Debt Management

The company's capital expenditure plan for the current fiscal year is primarily focused on maintenance, with no significant new CAPEX planned. The fill finish facility, part of the Rs. 176 crore CWIP, is expected to be capitalized by Q2 FY26, while the BSL-3 facility awaits administrative approval from BIRAC. Hester Biosciences successfully reduced its consolidated debt by Rs. 32 crores in March 2025 compared to March 2024, with debt repayments managed entirely through operational cash flow, and no new working capital additions are currently envisaged.

Competitive Landscape and Market Development

Hester Biosciences positions itself as a pure animal health company, distinct from integrated players like Venky's. The company is not losing market share to in-house production by large poultry players, noting that some competitors have divested their vaccine plants. In Africa, the strategy involves creating demand in primitive markets, with government-aided business gradually transitioning to the private sector, exemplified by their JV Thrishool Exim which operates with zero tender business.

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