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Hester Biosciences Limited Earnings Conference Call Summary
Date and Submission • Date of Call: August 2, 2024 • Submission to BSE and NSE: August 5, 2024 • Host: ICICI Securities • Key Executives: CEO Rajiv Gandhi, Executive Director Priya Gandhi
Financial Performance Highlights • Standalone Sales: 36% quarter-on-quarter increase • Overall Sales: 9% decrease due to prior year’s one-time sale • Animal Healthcare Division: 41% growth driven by domestic dairy demand • Poultry Healthcare Division: 35% increase due to poultry industry recovery • Petcare Division: 29% growth from increased vet clinic penetration • Profit Increase: 30% rise in profit, improved EBITDA and PAT
International Operations • Nepal: Slight turnover decline • Africa: Increased turnover but facing losses from depreciation and foreign exchange fluctuations
Future Plans • Market Opportunities: Focus on R&D and new product launches, especially in Animal Healthcare • Capacity Utilization: Nearly full in India; sufficient spare capacity in Africa and Nepal
Q&A Session Insights • Poultry Segment: No negative market trends affecting business • Revenue Potential: Current capacity utilization and no need for additional capital expenditure in Africa/Nepal • Vaccine and Health Products: Vaccine business larger and more profitable; growth potential in health products • Challenges in Africa: Optimism for future performance with improvements in foreign exchange and order visibility • Working Capital Cycle: Approximately 4 to 5 months, with inventories in raw materials and work-in-progress
Vaccine Development • H9N2 Vaccine: Promising potential in India and exports with limited global competition • Brucella Vaccine: Focus on safety and efficacy to enhance cattle productivity • Lumpy Skin Disease Vaccine: Differences in strains between India and Africa; Indian version expected in late 2025
Pet Division Performance • Growth: 29-30% quarter-on-quarter growth; overall modest growth at 8-9% • Future Investments: Focus on new healthcare products rather than significant investments
Conclusion • Management Commitment: Reaffirmed dedication to maintaining a positive business trajectory and addressing market demands.
Hester Biosciences Limited Earnings Conference Call Summary
Date and Submission • Date of Call: May 10, 2024 • Submission to BSE and NSE: May 14, 2024 • Moderator: ICICI Securities • Key Executives: • CEO: Rajiv Gandhi • Executive Director: Priya Gandhi • CFO: Nikhil Jhanwar
Financial Highlights • Consolidated Revenue: Rs. 300 crores • Quarter-on-Quarter Growth: 18% • Year-on-Year Growth: 14% • Animal Healthcare Division: Growth despite regulatory challenges • Poultry Healthcare Division: 22% growth in Q4 • Healthcare Division: 49% annual growth, slight dip in Q4 sales • Debt Reduction: Rs. 30 crores
Subsidiary Performance • Hester Nepal: Revenue of Rs. 5.5 crores • Hester Africa: Revenue of Rs. 5.2 crores • Expansion Plans: In both markets
Industry Insights • Poultry Industry Trends: • Increased poultry prices • Farmers' investment in vaccinations • Structural upswing supported by stable feed prices and reduced disease incidences • Nepal Operations: Turnover of Rs. 13 crores, beginning income tax payments
Challenges and Opportunities • Tanzania Plant: Challenges from war and currency issues, but optimistic about distribution network and vaccination promotion • Dairy Sector Demand: Increased government and private lending linked to cattle insurance and vaccination
Vaccine Development • Lumpy Skin Disease Vaccine: In development, expected for government procurement next year • Global PPR Eradication Program: Improved funding, no specific financial data available
Financial Outlook • Revenue Growth Expectations: Positive outlook for FY25, aiming to maintain or improve growth rate • Animal Health Division Profitability: Recent profits boosted by vaccine supply contracts, aiming for stable growth
Capital Investments • Capital Work-in-Progress: Rs. 168 crores primarily for BSL-3 facility and fill-finish line • Operational Timeline: Fill-finish line expected to be operational in two months
Geopolitical Considerations • Opportunities from Geopolitical Changes: No inquiries from Russia; the country is self-sufficient in animal vaccines
Conclusion • Commitment: Priya Gandhi expressed commitment to the animal healthcare sector and appreciation for stakeholder support.
Submission Details • Date of Notice: February 5, 2024 • Earnings Call Date: February 2, 2024 • Participants: • CEO: Rajiv Gandhi • Executive Director: Priya Gandhi • CFO: Nikhil Jhanwar • Moderator: Kashish Thakur (ICICI Securities) • Signed by: Vinod Mali (Company Secretary and Compliance Officer)
Financial Performance • Year-over-Year Growth: • Standalone revenue: +10% • Consolidated revenue: +13% • Quarterly Comparison (Q3 FY24): • Standalone revenue: -7% • Consolidated revenue: -11% • Division Performance: • Animal Health Care: -18% sales decline (due to Goat Pox vaccine demand normalization and brand discontinuation) • Poultry Healthcare: +8% growth (first positive trend in seven quarters) • Pet Care: Slight decline in Q3, but +91% growth over nine months
Profitability Metrics • Gross Profit Margin: 67% • EBITDA: -7% • PAT: -5%
Subsidiary Performance • Hester Nepal: Rs. 0.8 crores in Q3 • Hester Africa: Losses due to unmet sales targets
Management Insights • Poultry Vaccine Division: Acknowledged challenges but optimistic about recovery and growth. • Foreign Exchange Constraints: Challenges in African markets, efforts to boost domestic sales in Tanzania. • Product Development: Focus on private sector sales for PPR vaccines; clarified differences in vaccine strains between India and Nepal.
Product and Market Development • African Market: Vaccines produced include Nigerian strain of PPR and various poultry vaccines. • Human Vaccine Facility: Awaiting approval for repurposing; no plans to sell. • Recombinant Vaccines: Increased regulatory scrutiny post-COVID; preference for animal vaccines.
Future Strategies • Market Development: Need for more personnel in Africa; appointing exclusive distributors and hiring local staff post-registration. • Debt and CAPEX: Net debt of Rs. 232 crores; future CAPEX focused on necessary expenditures, particularly for R&D.
Closing Remarks • Commitment to transparency and addressing shareholder concerns. • Acknowledgment of repetitive explanations in recent quarters, with reassurance of ongoing efforts.
Submission Details • Date of submission: November 9, 2023 • Earnings call date: November 7, 2023 • Hosted by: ICICI Securities • Key participants: • CEO Rajiv Gandhi • Executive Director Priya Gandhi • CFO Nikhil Jhanwar • Communication signed by: Vinod Mali, Company Secretary and Compliance Officer • Note: Call was recorded
Financial Performance • Q2 FY24 Highlights: • 20% increase in standalone revenue for the first half of FY24 • 28% rise in consolidated revenue for the first half of FY24 • Q2 saw: • 8% decline in standalone revenue • 4% decrease in consolidated revenue • Division Performance: • Animal Healthcare Division: • 16% drop in sales due to demand shift and product discontinuation • Poultry Healthcare Division: • 4% overall sales decrease, despite domestic growth • Pet Care Division: • Growth driven by market expansion • Profitability Metrics: • Gross profit margin maintained at 69% • EBITDA fell by 24% • PAT decreased by 34% • Subsidiary Performance: • Losses reported in Nepal and Africa due to market challenges
Future Plans • Launch of new and modified products across divisions • Focus on enhancing operational efficiency • Continued support for livestock health initiatives in India
Conference Call Insights • Revenue and Margins: • Keshav Garg inquired about expected revenues; Rajiv Gandhi focused on health products with lower margins but anticipated revenue growth. • Finance Costs: • Nikhil Jhanwar discussed increased finance costs due to a dollar loan in Africa, suggesting stabilization but not a return to previous levels. • EBIT Margins: • Vivek Tulsyan questioned EBIT margin improvements; Jhanwar linked it to increased sales in Africa. • Long-term Outlook: • Rajiv Gandhi optimistic about returning to historical margin levels within two to three years through efficiency improvements. • Conclusion: • Assurance of ongoing efforts to enhance profitability and governance.
Submission Details • Date of submission: 16 August 2023 • Earnings call date: 8 August 2023 • Hosted by: ICICI Securities • Key participants: • CEO Rajiv Gandhi • Executive Director Priya Gandhi • CFO Nikhil Jhanwar • Document signed by: Vinod Mali, Company Secretary and Compliance Officer
Financial Performance Overview • Standalone Revenues: Increased by 59% • Consolidated Revenues: Increased by 73% • EBITDA Growth: • Standalone: 24% • Consolidated: 93% • Animal Healthcare Division: • Growth: 93% • Contribution to revenue: 42% • Poultry Healthcare Division: • Growth: 13% • Health product sales: Increased by 23% • Pet Care Division: • Sales: INR 80 lakhs • Future plans: More specialized products
Research and Development • Ongoing development of new vaccines • Adjustments for regulatory compliance • Expansion of manufacturing capacity • Exploration of new markets, particularly in Nepal and Africa
Q&A Highlights • PPR Vaccine Outlook: Estimated sales of INR 35 crores for the current quarter. • Regulatory Changes Impact: Minor revenue loss of around INR 1 crore expected. • Tanzania Operations: Six products launched; facing government tendering and regulatory challenges. • Poultry Sector Performance: Slight improvement noted; vaccine sales up 8%, health product sales up 23%. • Next-Generation Vaccines: Projects for Brucella, Classical Swine Fever, and Avian Influenza underway. • Employee and Operational Expenses: Optimal hiring level reached; focus on performance.
Strategic Focus • Emphasis on animal health products for higher return on investment. • Expansion efforts in Africa supported by the Bill Gates Foundation. • Acknowledgment of challenges from COVID-19 and currency fluctuations. • Commitment to growth and gratitude for investor support.
Hester Biosciences Limited Earnings Conference Call Summary
Date and Submission • Date of Call: May 17, 2023 • Submission to BSE and NSE: May 22, 2023 • Host: ICICI Securities • Key Management Present: • CEO Rajiv Gandhi • Executive Director Priya Gandhi • CFO Nikhil Jhanwar
Financial Performance • Q4 FY2023 Results: • 21% increase in standalone revenues • 11% growth in EBITDA • Poultry Division Dependency: Reduced from 80% to 60% through expansion in animal health division.
Business Developments • Lumpy Skin Disease (LSD): • Upcoming LSD vaccine launch by FY2024. • Pet Care Division: Newly introduced with growth potential. • Poultry Healthcare Division: • 8% decline due to industry pressures, but vaccine sales recovering. • Secured Rs. 40 Crore order for PPR disease immunization program. • Vaccine Manufacturing: Expansion underway.
Regional Insights • Nepal Subsidiary: Growth observed. • Tanzania Subsidiary: Potential for $25 million sales growth post product registrations.
Market Challenges and Opportunities • Poultry Market: High input costs and low revenues affecting performance. • Animal Health Products: Emphasis on improving farmers' incomes; government focus on animal husbandry. • Pet Care Market: Rapid growth, potential to surpass traditional segments.
Revenue Fluctuations • Animal Health Revenue Drop: From Rs. 43 Crores to Rs. 21 Crores quarter-on-quarter due to variable government orders. • Future Revenue Potential: • Nepal could reach Rs. 50 Crores at full capacity. • Indian animal healthcare segment estimated at Rs. 5000 to Rs. 8000 Crores.
Capital and Growth Outlook • Projected Revenue: Rs. 600 Crores expected in approximately three years. • Poultry Division Revenue: Slight increase in other revenues from Rs. 32 Crores to Rs. 36 Crores. • Health Products Growth: 60% increase, while vaccines saw a 15% decline. • Overall Confidence: Management optimistic about growth and improved margins in future quarters.
Conclusion • The call concluded with gratitude to participants, emphasizing continued confidence in Hester's future growth across various divisions.
Submission Details • Date of submission: February 2, 2023 • Earnings call date: January 31, 2023 • Hosted by: ICICI Securities • Key participants: • CEO Rajiv Gandhi • Executive Director Priya Gandhi • CFO Nikhil Jhanwar • Communication signed by: Vinod Mali, Company Secretary & Compliance Officer • Reminder: Call was recorded
Financial Highlights • Animal Healthcare Division • Contributes nearly 50% of total sales • 202% growth in Q3, driven by Goat Pox Vaccine supply during Lumpy Skin Disease outbreak
• Poultry Healthcare Division • 22% decline in sales due to recessionary conditions • Slight decrease in gross margins, but overall EBITDA grew by 13%
• Pet Care Division • Launched 10 products in last two quarters, with 3 more planned for Q4 • Focus on high-quality healthcare products and market expansion
Production and Capacity Updates • Key facility completion delayed; expected to start operations in Q1 FY '24 • Drug substance facility operational; poultry vaccine production capacity to double with fill-finish facility
COVID-19 Vaccine Plant • Transitioning from Covaxin to other vaccine options • Facility ready for production; discussions ongoing for marketing and licensing
Market Insights • Decline in poultry vaccine sales linked to high input costs for farmers • Revenue from animal health products reliant on government immunization programs • Exploring Southeast Asian markets, including Vietnam and Cambodia
Strategic Initiatives • Positive growth in Poultry Healthcare products despite vaccine sales decline • Shift to smaller dose vaccines produced in Nepal for export to Africa • Promotion of dairy Brucella vaccines in the private sector
Funding and Programs • FAO securing funding for PPR vaccine eradication program • Indian government's National Eradication and Immunization program progressing well
African Market Focus • Three business channels in Africa: FAO tenders, country tenders, and trade • Current sales from Tanzanian facility below 1 million, but potential exceeds 20 million
Conclusion • Rajiv Gandhi emphasized commitment to enhancing company value • Call concluded with appreciation from the moderator