Hester Biosciences Ltd Consolidated Net Profit up 6% to Rs. 10.75 crore in H1FY24

Consolidated Financial Highlights

(Rs. Crore)

Particulars	Q2			H1
	FY24	FY23	Change %	FY24	FY23	Change %
Revenue from operations	70.46	73.15	-4%	158.31	123.85	28%
EBITDA	13.21	12.75	4%	27.58	20.18	37%
PAT (excl. OCI)	4.04	6.60	-39%	10.75	10.16	6%
EPS (In  Rs. , not annualized)	4.75	7.77	-39%	12.64	11.95	6%

New Delhi (India) November 7: Hester Biosciences Limited, one of India’s leading animal health company, manufacturing vaccines and health products has reported consolidated net profit of Rs. 10.75 crore in H1FY24 ended September 2023 as against net profit of Rs. 10.16 crore in H1FY23, growth of 6%. Company reported revenue from operations of Rs. 158.31 crore for the H1FY24, growth of 28% Y-o-Y as compared to revenue of Rs. 123.85 crore in H1FY23. EBITDA during H1FY24 ended September was reported at Rs. 27.58 crore, 37% growth Y-o-Y from Rs. 20.18 crore in H1FY23. EPS for H1FY24 was reported at Rs. 12.64 per share.

Consolidated results include operations of subsidiaries from Nepal and Tanzania. Hester Nepal had a turnover of Rs. 0.73 Crore in Q2 FY24, primarily from domestic sales of vaccines with overall Net Loss of Rs. 0.71 Crore. The over all impact of exports and international tenders has also been felt at Nepal but we are neutralizing that impact by focusing on domestic business which is showing a lot of potential.

Hester Africa has continued with export sales aggregating to Rs. 1.96 Crore in Q2 FY24 with overall loss of Rs.4.92 Crore, arising primarily on account of foreign exchange fluctuation on borrowings.

• The plant is ready with 6 vaccines registered and another 5 on way to be registered by the end of this financial year. The much awaited harmonization of registration process is under implementation, which will then enable us to start marketing our vaccines immediately to other East African countries, a process which was supposed to have been implemented over a year ago within the East African community.
• The weaker purchasing power of African countries has currently resulted into lesser sales.

Hester’s share of profit in joint venture entity, Thrishool Exim Limited, Tanzania has increased in Q2 FY24 by Rs.0.99 Crore.

Way Forward

We are conscious of the reduction in the bottom line and are working towards restoring the same. Initiatives towards this action are:

Short term:

1. Boost sales and improve productivity per sales person
2. Give a push for exports from all the three plants
3. Work towards production efficiency

Middle term:

Repurpose the BSLIII Laboratory from manufacturing the Drug Substance of Covid vaccine to human or other veterinary vaccines

Long term:

Focus on R&D to develop next generation vaccines, new vaccines

Animal Healthcare Division

1. In Q2 FY24, the Animal Healthcare division experienced a 16% decline in sales mainly due to the uneven sales of Goat Pox Vaccine. There was an unprecedented surge in demand for the Goat Pox Vaccine (GPV) in Q1 FY23 in response to an outbreak of Lumpy Skin Disease (LSD) in cattle.
2. It is important to note that, GPV sales got distributed across both quarters of H1 FY24, in contrast to the previous year where the GPV sales were concentrated in Q2. The overall sales of GPV for H1 FY24 have maintained consistency with figures from H1 FY23.

Poultry Healthcare Division

In Q2 FY24, the Poultry Healthcare division saw a 4% decrease in overall sales.

1. Domestic vaccine sales experienced a growth of 6%, marking a significant turnaround after six consecutive quarters of decline, attributable to improved sales operations and better farm economics.
2. In contrast, there was a substantial 43% reduction in export sales. This decline in exports was attributed to foreign exchange constraints in African countries, thereby reducing their purchasing ability, which led to the degrowth.

Petcare Division

The Petcare division, launched last year, has demonstrated impressive performance in Q2 FY24, achieving sales of ₹0.94 Crore, growing 98% as compared to Q2 FY23. This achievement is attributed to a consistent trend in the Petcare segment, driven by successful expansion and increased market penetration into new territories.

Standalone Financial Highlights

Revenues

                                                                                                            (₹ Crore)

Division	Q2			H1
	FY24	FY23	Change %	FY24	FY23	Change %
Animal Healthcare	30.47	36.08	-16%	52.94	48.15	10%
Poultry Healthcare	33.96	35.45	-4%	64.25	69.87	-8%
Petcare	0.94	0.47	98%	1.74	0.56	212%
Others*	–	–	–	26.79	–	100%
Product Sales	65.37	72.00	-9%	145.72	118.58	23%
License & services fees	1.06	–	100%	1.06	3.95	-73%
Revenue from Operations	66.43	72.00	-8%	146.78	122.53	20%

Profitability Analysis

(₹ Crore)

Particulars	Q2			H1
	FY24	FY23	Change %	FY24	FY23	Change %
Gross Profit margin	69%	69%	–	61%	68%	-7%
EBITDA	11.99	15.78	-24%	23.36	24.98	-6%
PAT	6.78	10.35	-34%	13.25	15.35	-14%
EPS (In ₹, not annualised)	7.97	12.16	-34%	15.58	18.04	-14%

Overall gross profit margin was maintained at 69% in Q2 FY24.

1. EBITDA and PAT de-grew by 24% and 34%, respectively in Q2 FY24 due to various factors:
2. Further rationalization of product mix.
   • Further rationalization of product mix.
   • Withdrawal of 2 products in Animal Healthcare division due to change in drug regulations.
   • The overall focus to increase the sales of health products in both the divisions to address a wider market.

Product segment updates:

Vaccines sales:

1. All states in India have initiated an immunization program targeting Lumpy Skin Disease through the Goat Pox Vaccine. The distribution of supplies of GPV has commenced, and we anticipate selling between 3 to 3.5 Crore doses over the course of the next two quarters.
2. In Q1 FY24, Hester initiated the distribution of PPR vaccines as part of the National Immunization program. The contract entails the supply of 30 Crore doses of PPR vaccine, with completion expected by October 2024.

Health products sales

1. The sales of our health products were affected by the discontinuation of two of our brands – CurX injection and iSumovet. This decision was a result of the change in drug regulations, which prohibited the use of Ketoprofen for animal purposes. The combined sales of these two products amounted to ₹5 Crore in FY23.
2. To address the above, we launched a new product CurX LA, which is a substitute CurX in this month, and the substitute of iSumovet is expected to be launched in Q3. These two products are expected to recoup the sales loss arising from withdrawal of above brands.
3. Overall the company has decided to aggressively pursue the sales and marketing of health products in both the divisions to address a wider market.

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