Hester Biosciences Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Poultry delivers a record quarter: Poultry Healthcare revenue hit ₹65 crores with ~30% margins, the highest ever, driving a 41% Q4 surge and a 21% full-year gain.
• Animal Health dragged by tender timing, not demand: Revenue fell 30% YoY as government immunization programs slipped, but Q4 execution improved with 6.3 crore PPR doses supplied and a recovery is expected from Q1 FY27.
• Revenue mix has swung decisively: The split moved from near 50-50 two years ago to 70-30 in favor of Poultry, a concentration management wants to rebalance back toward parity.
• Exceptional income flattered profitability: A partial divestment of the Texas Lifesciences stake boosted the bottom line, alongside stronger poultry execution and favorable mix.
• What to watch next quarter: Whether the promised Animal Health recovery materializes, the pace of receivables reduction from ₹92 crores, and any early signal on H9N2 vaccine uptake in the private poultry market.

Poultry Healthcare: The Quarter's Engine

• Record scale and margin: Quarterly poultry revenue of ₹65 crores at ~30% margins was the highest ever, driven by deeper market penetration, expanded placements, stronger field execution and sustained vaccine portfolio demand.
• Sustainability is the open question: Management hopes to sustain this level as a base but acknowledges many external forces make prediction difficult.
• H9N2 vaccine opens a new front: Both marketing and manufacturing licenses were received during the quarter, strengthening the biologicals portfolio. The opportunity is expected to be largely driven by the private commercial poultry market where biosecurity and disease preparedness remain key priorities.
• Holistic engagement model taking shape: Technical teams developed an integrated avian influenza management approach covering vaccination, farm hygiene, bird immunity and environmental management, plus introduced probiotics and disinfectant solutions focused on gut health and post-vaccination outcomes.

Priya Gandhi: "The objective here is to create a major holistic outcome-oriented engagement model for farmers rather than doing disease management through a single specific product approach."

Animal Healthcare: Tender Delays, Not Demand Destruction

• The 30% YoY decline is timing, not structural: Tender-led immunization programs planned for Q1 through Q4 did not materialize for reasons outside management's control. Q4 did begin to pick up, with 6.3 crore doses supplied under the National PPR immunization program.
• Recovery expected now: Management expects to recover the Animal Health business from Q1 FY27 onwards.
• PPR eradication in Africa remains a long-term call: Demand visibility stays strong, but execution timelines continue to depend on country-level rollout schedules. Parts of the region witnessed temporary political and election-related disturbances.
• R&D pipeline tilting toward Animal Health: More focus is being directed to the Animal Health division and biologicals within it, with the expectation that the division picks up in coming times.

Priya Gandhi: "However, it is important for me to reiterate that these were simply timing-related challenges and no issues in the demand."

Revenue Mix & the Concentration Question

• A two-year swing from balance to dependence: FY26 revenue mix was 70-30 in favor of Poultry Healthcare; two years ago both divisions were almost 50-50. The ratio is skewed more towards poultry currently.
• Management's target is rebalancing: The stated aim is a 50-50 revenue mix between Poultry and Animal Health, so the company is not hyper-dependent on any one division.
• Animal Health recovery is the mechanism: Rebalancing depends on the Animal Health division picking up, which management ties to tender execution and the R&D pipeline in biologicals.

Balance Sheet & Working Capital

• Receivables jumped on quarter-end sales concentration: Receivables of ₹92 crores appear high relative to revenue partly because Q4 sales were more than 33% of the quarter number. Management is working to reduce days.
• Bad debts write-off of ₹6.5 crores: Comprises provision for debtors as required and identification of a few old non-recovered debts written off. Management says it may not be so alarming going forward and focus will be to reduce write-offs.
• Net debt comfort: Current debt to equity of 0.19 times is described as quite comfortable. The net debt figure as of 31st March was requested but not provided on the call.
• Capital allocation pivots to utilization: Having installed significant capex including the Fill-Finish and BSL-3 facilities, the aim is to optimize utilization. But evolving regulatory requirements and new technologies mean there cannot be a definitive answer on whether more capital will be allocated.

Capacity & Infrastructure

• Fill-Finish facility capitalized: Enhances drug product capacity and provides flexibility for future scale-up across domestic and export markets.
• BSL-3 facility capitalized and being optimized: Management is undertaking optimization initiatives aligned with current operational and scale-up requirements, focusing on improving utilization efficiency and operating cost over the long term.
• Regulatory evolution keeps capex open-ended: Regulatory processes evolve time and again from the drug department, and compliance is an evolving process worldwide, making it difficult to hypothesize what future requirements might demand.

Rajiv Gandhi: "Regulatory processes are time and again evolved from the drug department and one has to comply. And it is an evolving process all over the world. So it is difficult to hypothesize and tell what could come from the drug department."

International & Other Segments

• Africa strategy becoming more structured: Evolving toward more selective execution with focus on registration, market development and R&D. Registrations expanded across key African markets, though parts of the region witnessed temporary political and election-related disturbances.
• Nepal operations under watch: Management is closely monitoring the business environment, focused on strengthening operational stability and long-term sustainability.
• Petcare remains nascent: Continues to scale gradually across selected therapeutic and supplement products and remains a long-term strategic focus area. Management confirms no commercialized vaccines in the Pet division at the moment.
• External risks flagged: Volatility in tender business timing and increasing raw material costs linked to global geopolitical developments and supply chain disruptions may create periodic cost pressures. The company continues to focus on operational efficiency and calibrate price actions wherever required.

Guidance & Commitments

Key Metrics