Hester Biosciences Ltd Q1 FY2026 Concall Summary

Key Takeaways

• Revenue hit by deferred government tenders: Stand-alone revenue fell 14% as two large Animal Health immunization programs were pushed out, not cancelled, masking steady Poultry and international performance.
• Consolidated PAT more than doubled: Over 100% growth, driven by Hester Africa's swing from loss to a INR5 crores profit and sustained margin discipline across regions.
• Africa turnaround is the quarter's bright spot: Tanzania facility stabilization and better commercial execution turned the subsidiary profitable, with management optimistic the trend can hold.
• Regulatory clearance is the near-term catalyst: An avian influenza vaccine launch and BSL-3 facility repurposing both await government approvals expected in the coming months.
• What to watch next quarter: Whether the deferred PPR and lumpy skin disease programs actually begin execution, the pace of new product registrations in Africa, and any update on avian influenza vaccine clearance.

Animal Health: The Deferral, Not a Demand Problem

• Two large tenders drove the 33% drop: Execution of PPR and lumpy skin disease (Goat Pox Vaccine) immunization programs was deferred, and because these are tender-driven with nonlinear timelines, the division's revenue is lumpy by nature.
• No cancellations, just timing: Management was explicit that the programs are delayed, not lost, and expects execution to begin picking up in Q2 and beyond.
• PPR private market push in Africa: The company is targeting private-market PPR vaccine sales in several African countries and remains in regular contact with the African agency that replaced the FAO, creating a second demand channel beyond government tenders.

Priya Gandhi: "These are not cancellations but just deferrals, and we expect execution to begin picking up in Q2 and beyond."

International Business: Africa Profits, Nepal Steady

• Hester Africa swung to a INR5 crores profit from a loss in the same quarter last year, driven by improved commercial execution, better market penetration, and stabilization of the Tanzania facility.
• Sustainability is the open question: Management declined to commit that the trend will continue, calling it too early to call, but expressed optimism and noted the team has been selectively expanded to address commercial opportunities.
• Hester Nepal performed consistently, though quarterly revenues vary with the timing of institutional orders rather than any shift in underlying demand.
• New registrations as a buffer: The company is securing new product registrations across various African countries, which can compensate if any one business dips.

Poultry Healthcare: Steady Growth, Share Ambition

• 2% growth led by core vaccines: Sustained demand for Newcastle disease and Marek's vaccines drove the division, while feed supplements and disinfectants launched last year are gaining acceptance.
• Market share gain is the stated objective: Management aims to gain more share in coming months to create an upward trend irrespective of broader poultry industry dynamics.
• Feed supplements and disinfectants are expected to improve their contribution further over the next two quarters as initial market feedback has been encouraging.

Product Pipeline & Regulatory Catalysts

• Avian influenza vaccine ready, awaiting clearance: Everything from the company's side is complete; regulatory clearances are anticipated this quarter, though the exact timing sits with the government.
• BSL-3 facility repurposing in progress: Originally built for COVID bulk antigen, the facility now needs government permission to repurpose for animal vaccines, a process management accepts will involve lag but expects resolution in the next few months.
• African swine fever vaccine in scouting phase: No vaccine is currently available anywhere in the world, and the company is exploring how to enter manufacturing, with no outer timeline offered.

Rajiv Gandhi: "There is no vaccine currently available in the world, but we are as much scouting to -- how to get into the manufacturing of African swine fever."

Margins & Cost Discipline

• Profitability held steady despite the top-line dip: EBITDA and PAT margins were preserved through cost optimization, operational efficiency, product mix choices, and process standardization across plant functions.
• Consolidated PAT growth of over 100% reflected both the Africa turnaround and margin control, with efficiency execution visible across regions.
• Capacity optimization is underway across all three plants, driven by rising demand in Africa, which should support operating leverage as volumes return.

Strategic Realignment

• Sales and marketing approach shifted to be more field-focused, with R&D prioritization strengthened around products.
• Petcare segment is expected to begin contributing more meaningfully to the top line in coming quarters, though no quantification was offered.
• FMD vaccine is off the table for now: Management declined to discuss it, stating there is no short-term plan to enter that category.

Rajiv Gandhi: "It being a governmental thing is a lag, which we have to accept."

Guidance & Commitments

Key Metrics