Hester Biosciences Limited Q3 FY26 Earnings Call Summary

Summary

Hester Biosciences Limited - Q3 FY26 Earnings Call Summary Friday, January 30, 2026 2:00 p.m.

Event Participants

Executives 3 Ashish Desai (CFO), Priya Gandhi (Executive Director), Rajiv Gandhi (CEO and MD)

Analysts 4 Arya Shah, Harshal Mehta, Madhur Rathi, Ravi Mehta

Financials & KPIs

Geographic & Segment Commentary

• Poultry Healthcare: Delivered 32% growth in Q3 and 17% over 9 months. Growth was driven by deeper market penetration and core vaccine demand. The segment recently received licenses for the H9N2 Avian Influenza vaccine, targeting both domestic private markets and exports.
• Animal Healthcare (Ruminant & Pet): Segment declined 38% in Q3 due to institutional delays in the National PPR and Goat Pox (LSD) immunization programs. Momentum is expected to return in Q4 FY26 as government programs commence in February 2026.
• Petcare: Currently accounts for <5% of Animal Healthcare revenue. Management is scaling this organically across therapeutics and supplements, exploring vaccine opportunities for India and Africa using current facilities.
• International Operations (Africa & Nepal): Africa remains a strategic hub for PPR eradication programs; performance is dependent on multilateral funding releases. Nepal operations are currently in a “challenging phase” undergoing strategic review for sustainability.

Company-Specific & Strategic Commentary

• Capacity Expansion: Capitalized the fill/finish facility (part of ₹182 cr CWIP), doubling drug product capacity. This allows Hester to fulfill increased demand for existing products and expand into new export markets without immediate incremental capex.
• H9N2 Strategy: Moving beyond single-vaccine sales to an “Integrated Avian Influenza Management” approach. This holistic model includes vaccines, probiotics, and farm hygiene to improve bird immunity and environmental biosecurity.
• Product Mix Optimization: Management is actively pivoting toward higher-margin products and private commercial sales to reduce historical dependence on low-margin government tender business.
• BSL-3 Repurposing: The facility originally built for COVID-19 drug substance is being evaluated for conversion into a veterinary vaccine plant, specifically for high-containment animal pathogens.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Poultry Growth & Margins

• Question: Is the ~₹20 crore quarterly EBITDA sustainable or was it driven by one-off factors like bird flu outbreaks? (Madhur Rathi)
• Answer: The profitability is not driven by the Kerala bird flu attack; it is a result of streamlining plant activities and optimizing product mix. Management aims to maintain this trajectory on a YoY basis (Rajiv Gandhi).

Product Strategy

• Question: What is structurally changing in the Poultry segment to maintain 20%+ margins consistently? (Ravi Mehta)
• Answer: It is a conscious action to push a specific product mix that impacts the bottom line positively. While seasonal cycles exist, the endeavor is to improve year-on-year margins through disciplined sales (Rajiv Gandhi).

New Capacity & H9N2

• Question: How will the doubled capacity from the new fill/finish facility be utilized? (Madhur Rathi)
• Answer: It will cater to existing product growth and expanded export markets where Hester will maintain its own branding rather than contract manufacturing (Priya Gandhi).
• Question: What is the market size for the newly licensed H9N2 vaccine? (Ravi Mehta)
• Answer: It is difficult to quantify a specific number as the market is evolving, but it is a critical disease for the poultry industry with significant private and export demand (Priya Gandhi).

Strategic Direction

• Question: How far along is the shift away from tender-based revenue? (Harshal Mehta)
• Answer: It is an ongoing process. Hester is increasing direct reach to dairy farms and private poultry enterprises to build a more resilient, less tender-dependent business (Rajiv Gandhi).

Key Takeaway

Hester Biosciences reported a resilient Q3 FY26, characterized by a sharp 140% YoY increase in standalone PAT despite a 40% 9-month decline in the Animal Healthcare segment. The company successfully capitalized its fill/finish facility, doubling drug product capacity to support the launch of the H9N2 Avian Influenza vaccine and holistic biosecurity solutions. While institutional tender delays for PPR and Goat Pox vaccines hampered ruminant sales during the first nine months, management expects a recovery in Q4 FY26 as national immunization programs commence in February. The strategic focus remains on optimizing product mix to maintain 20%+ margins, scaling the nascent Petcare division, and reducing tender dependency by deepening private market penetration. Hester is positioned for improved performance as it leverages its expanded manufacturing footprint to meet both domestic and global vaccine demand.