Hester Biosciences Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Standalone business contracted, consolidated profit surged: Standalone product sales fell 12% YoY while consolidated net profit nearly doubled, driven by favourable forex and a Central Africa turnaround.
• Animal Healthcare hit by a timing delay, not demand loss: A 50% Q2 degrowth stemmed entirely from a delayed government immunization program, with a pickup expected as execution normalizes.
• Poultry Healthcare delivered volume-led growth: The segment grew 18% in Q2 on strong vaccine demand, and the newly authorized H9N2 vaccine opens a fresh export channel.
• BSL-3 repurposing adds unplanned capacity: A permit to convert the human vaccine facility for veterinary use will add production capacity beyond the previously disclosed 100 crore doses, with a manufacturing license expected soon.
• What to watch next quarter: Whether the government immunization program resumes in Q4 as anticipated, the receipt of the BSL-3 manufacturing license, and the commercial launch of the Avian Influenza vaccine.

Standalone Business: The Decline and the Defence

• Product sales dropped: Standalone divisional product sales fell 12% in Q2 and 13% in H1 YoY, pulling EBITDA and net profit down 13% and 15% respectively on an H1 basis.
• Margin protection is structural, not tactical: Management is standardizing processes, deploying manpower more efficiently and balancing the product mix, describing this as a sustained effort to make Hester structurally stronger and less dependent on external variability.
• Therapeutic and nutritional segment held steady: This segment maintained customer engagement and market presence, providing a stable base while the vaccine business absorbed the shock.

Priya Gandhi: "These measures are not a short-term fix, but a part of our sustained effort to make Hester structurally stronger and less dependent on any external variability."

Segment Performance: A Tale of Two Healthcares

• Poultry vaccine revenue has been range-bound: Revenue grew only from ~₹150 cr in FY21 to ~₹170-odd cr in FY25, with no major poultry outbreak driving incremental demand for any single company.
• Lumpy Skin Disease vaccine status: The government currently uses the Goat Pox vaccine for LSD, which Hester supplies; management stated there is no loss of even ₹1 in business to Hester from the government on this account, and Hester's own LSD vaccine launch is expected by the middle of next financial year.

Priya Gandhi: "Importantly, this is a timing-related delay and not a demand issue."

International Operations: Africa Turns, Nepal Stumbles

• Central Africa delivered a turnaround: Net profit of ₹4.8 cr in Q2 and ₹10.32 cr in H1, supported by stable operations at the Tanzania plant and stronger execution discipline; the business remains on track to achieve breakeven by FY'28.
• Hester Nepal swung to a quarterly loss: A net loss of ₹1.1 cr in Q2 was driven by the timing of institutional orders and temporary disturbances in August that affected logistics and field movement; the business maintained a profit of ₹0.8 cr for H1, and institutional execution is expected to resume in the second half.
• Product allocation across plants is strain-specific: Country-specific strains differ, and strains approved in Africa may not be allowed in India and vice versa; allocation minimizes duplication and depends on regulatory approval, demand, cost and time studies for each vaccine.
• GALVmed VITAL program participation: Hester is collaborating in the GALVmed-led VITAL program covering Tanzania, Kenya and Nigeria, which supports veterinary innovation and animal health.

Capacity Expansion: BSL-3 Repurposing and Capex

• BSL-3 facility repurposing adds unplanned capacity: Hester received a government permit to repurpose its BSL-3 human vaccine facility for veterinary use; the manufacturing license is anticipated in the next quarter or early Q1 next year, and this capacity is additional to the previously disclosed 100 crore doses.
• Capital work in progress to capitalize by March: ₹182 cr of capital work in progress at the India plant is expected to be fully capitalized by March, doubling capacity depending on product mix; over the next few years, this facility is expected to be a key growth driver.
• No major capex for 2–3 years: Management gave a qualified confirmation that no major-scale capex is required for the next 2–3 years, though minor capex for plant upkeep, renovation and drug authority changes will arise.
• Avian Influenza vaccine launch imminent: Sales are expected to begin post-receipt of the manufacturing license, anticipated by December, with export sales to follow soon after.

New Initiatives: Pet Vaccines and Healthcare Solutions

• Healthcare Solutions launching this quarter: A new offering to complement vaccines for better performance, addressing bird immunity and farm biosecurity, will launch this quarter.
• Pet vaccines are at a nascent R&D stage: A rabies vaccine and a 9-in-1 canine vaccine are in very early R&D; Hester aims to offer locally manufactured alternatives to imported products in India and Africa, using existing facilities without major additional capex, and is exploring licensing opportunities ahead of a dedicated manufacturing setup.
• No timeline can be given for pet vaccines: Management was explicit that the R&D stage is too early to share any timeline, though groundwork is in motion and better engagement from veterinarians and distributors is expected to translate into measurable growth over the next few quarters.

Priya Gandhi: "So these are the two vaccines, which we are working. But it's at a very, very nascent stage at this point in time. I will not really be able to give any time line."

Financial Position: Debt, Margins and Pricing

• Consolidated margins held stable: Driven by operational discipline and cost control, even as the standalone business absorbed a decline.
• Debt repayment on schedule: Repayment will happen as per schedule; fast repayment is an endeavor, but minor capex for renovation and drug authority changes may divert some cash, and no specific amount was committed.
• Management declined to provide a per-dose average price: Vaccines range from ₹0.04 to ₹5–6 in India and ₹15–20 in Africa, making an average price meaningless per management; an analyst's assumption of ₹0.02 per dose was explicitly rejected.

Rajiv Gandhi: "In vaccine does not have an average price because we sell the vaccine for INR5 to INR6 and cheaper vaccine sell for INR0.04. So, we do it according to the demand and requirement."

Guidance & Commitments

Key Metrics