Hester Biosciences Limited Q2 & H1 FY23 Results

Ahmedabad, November 08, 2022: One of India’s leading poultry and animal vaccine manufacturing company, Hester Biosciences Limited has reported consolidated net profit of Rs. 6.60 crore and Revenue from Operations of Rs. 73.15 crore for the Q2FY23. For H1FY23 the company reported net profit of Rs. 10.16 crore and Revenue from operations of Rs. 123.85 crore. The Company has achieved the highest quarterly sales in its history. The substantial increase in the current quarter sales has offset the degrowth in Q1 FY23. 

Consolidated Financial Highlights

Particulars	Q2			H1
	FY23	FY22	Change %	FY23	FY22	Change %
Revenue from operations	73.15	62.66	17%	123.85	122.85	1%
Net Profit (excl. OCI)	6.60	11.13	-41%	10.16	22.15	-54%
EPS (In INR, not annualised)	7.77	13.08	-41%	11.95	26.03	-54%

 (INR Crore)

·        Consolidated results also include operations of subsidiaries at Nepal and Tanzania.

· Hester Africa recorded a revenue of INR 0.15 crore upon commencement of the commercial sales operations within Tanzania during Q2. Moving further, in the coming quarters, export operations will also pick the pace up and contribute towards the overall growth. 

The increase in sales can be largely attributed to:

1) A spurt in the demand for the Goat Pox Vaccine to control the outbreak of Lumpy Skin Disease (LSD) in cattle in the country. With no specific vaccine available for LSD in India, Goat Pox Vaccine was permitted for use as a heterologous vaccine to immunize cattle against LSD. Hester has been and continues to be the dominant supplier of the Goat Pox Vaccine to various State Government bodies and in the private sector.

2) A growth of 36% in the health products business. This has been achieved from new product introductions and territorial expansion. 

The company’s Vaccine sales have increased by 24% in Q2 while it shows a degrowth in H1 due to significant low sales in Q1 for poultry vaccines. The poultry industry continues to be under pressure to high feed costs and low product realisations. Health Products sales has increased by 36%.

 Standalone Financial Highlights

Division Revenues   (INR Crore)

Division	Q2			H1
	FY23	FY22	Change %	FY23	FY22	Change %
Poultry Healthcare	35.45	41.38	-14%	69.87	85.84	-19%
Animal Healthcare	36.55	15.21	140%	48.71	25.61	90%
Product Sales	72.00	56.59	27%	118.58	111.45	6%
License & services fees	–	–	–	3.95	3.65	8%
Revenue from Operations	72.00	56.59	27%	122.53	115.10	6%

  

Product Category Revenues   (INR Crore)

Divisions	Q2			H1
	FY23	FY22	Change %	FY23	FY22	Change %
Vaccines	52.78	42.41	24%	83.52	86.13	-3%
Health Products	19.22	14.18	36%	35.06	25.32	38%
Total Product Sales	72.00	56.59	27%	118.58	111.45	6%

 

Going further

The Company’s focus on the various segments would be as follows: 

Vaccines:

1.    With LSD as a new challenge in the cattle industry, we would be focusing on LSD awareness programs as well as promote the immunisation against LSD through our Goat Pox vaccine.

2.    Indian Veterinary Research Institute (IVRI) has developed an LSD vaccine as well as an Avian Influenza vaccine technology. Hester has bid to acquire both these technologies and develop its own LSD and Avian Influenza vaccines respectively.

3.    The current stress on the poultry industry has induced farmers to turn to more scientific farming. Hester aims at increasing the reach of its Technical Services team to help poultry farmers become more cost efficient via using more scientific methods as well as ensuring proper immunization against various diseases.  

4.    GoI would soon be commencing its PPR disease immunization program in sheep & goat. Hester being the successful bidder for the supply of PPR vaccine, these supplies are expected to start from Q4. 

Health Products:

1.    Though vaccines have been our core strength, the enormous, big market for animal health products has induced us to look at this segment for a higher top-line growth. We shall continue our endeavour to grow this division by increasing our field force in size as well as by improving the productivity of the field force.

2.    With the increase in our product range, we would now be looking at international markets as vaccines have contributed to over 97% of exports.

3.    Health products being low in margins, it is our continuous endeavour to improve the gross margins. 

Petcare division:

1.    The Company launched a new division for Petcare during Q1 with 10 products focused on therapies like anti-infectives, parasiticides, specialty nutrition and grooming with key focus on quality and efficacy.

2.    Moving further, activities related to market expansion and penetration by increasing field force and introduction of new products are ongoing.

3.    We have divided our distribution network into four regions to primarily cover all the metro cities initially and are working on market expansion into further cities.

4.    More products are planned for launch in Q4. These products will be in the categories of therapeutics, namely NSAIDs and De-wormers. 

India is the fastest growing pet market in the world, internally growing at 14%. Indian pet industry is set to touch INR 10,000 Crore by 2025. Considering this, the Petcare Division will emerge as a steady long term growth driver. 

Production and capacity expansion initiatives

1.    Bulk antigen (Drug Substance) production capacity expansion project is completed and capitalized in the books during the quarter.

2.    Expansion of the Fill-Finish (Drug Product) capacity is expected to be completed by Q4 FY23.  These 2 expansions will double the production capacity in vaccines.

Status on Hester’s initiative towards manufacturing the Drug Substance for Covaxin, a Covid-19 vaccine

1.    Hester, in consortium with Gujarat Biotechnology Research Centre (GBRC), Government of Gujarat (GoG), has entered into an agreement with Bharat Biotech to manufacture the Drug Substance for Covaxin under the Mission Covid Suraksha Scheme of Government of India.

2.    The project is to manufacture Drug Substance equivalent of up to 7 million doses per month.

3.    The construction of BSL-3 facility is completed. Commissioning activities is ongoing. The facility is expected to be ready for commercial operation by end of FY23.

4.    This facility can be repurposed to handle other micro-organisms beyond Covid-19. 

Profitability Analysis

Particulars	Q2			H1
	FY23	FY22	Change %	FY23	FY22	Change %
Gross Profit margin on Product Sales	70%	75%	-5%	68%	72%	-4%
Operating EBIDTA	15.78	17.14	-8%	24.98	35.28	-29%
Operating EBIDTA Margin	22%	30%	-8%	20%	31%	-11%
PAT (excl. OCI)	10.35	11.77	-12%	15.35	24.01	-36%
PAT Margin	14%	21%	-7%	13%	21%	-8%
EPS (In INR, not annualised)	12.16	13.84	-12%	18.04	28.22	-36%

 (INR Crore)

1.    The gross margins have reduced by 5% in Q2 and 4% in H1 FY23, on account of:

a.    Increase in proportion of sales of health products that have lower margins; and

b.    Change in product mix.

2.    Operating EBITDA and PAT margin have declined due to:

a.    Increased travel and sales promotion expenses in H1 FY23 versus H1 FY22, which were significantly lower due to Covid travel restrictions.

b.    Increased market development cost in Animal Health (driven by market expansion and new launches) and launch of the new Petcare Division.

c.     Increase in finance cost due to increase in borrowing and foreign exchange fluctuation costs.

Corporate Comm India (CCI Newswire)