Release Date: February 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hester Biosciences Ltd (BOM:524669, Financial) reported a 10% increase in stand-alone revenue and a 13% increase in consolidated revenue for the 9 months of FY '24.
- The Poultry Healthcare division experienced an 8% growth, marking a positive trend after 7 quarters of decline.
- The Petcare division demonstrated an impressive overall growth of 91% over the 9 months of FY '24.
- The company introduced a new product, CurX LA, as a substitute for discontinued products, showing proactive measures to address regulatory challenges.
- Hester Biosciences Ltd (BOM:524669) maintained an overall gross profit margin of 67% in Q3 FY '24.
Negative Points
- Stand-alone revenue for Q3 FY '24 decreased by 7%, and consolidated revenue saw an 11% decrease.
- The Animal Healthcare division observed an 18% decline in sales during Q3 FY '24 compared to the corresponding quarter.
- The discontinuation of two brands, CurX Injection and iSumovet, due to regulatory changes, negatively impacted sales.
- Hester Nepal reported a net loss of INR 0.94 crore in Q3 FY '24, despite generating INR 0.8 crore in revenue.
- Hester Africa experienced an overall loss of INR 3.6 crores in Q3 and INR 13 crores over the 9 months of FY '24, primarily due to unmet sales targets and fixed costs.
Q & A Highlights
Q: Sir, my question is pertaining to our Domestic Poultry Vaccine division, sir, because the poultry prices in the third quarter, domestically, they declined quarter-on-quarter, and the whole industry is in losses. And even in the fourth quarter domestic poultry prices are, the farm gate prices are still in losses. So basically, when do we foresee a recovery? And sir, is there any possibility of our vaccine division, poultry domestic vaccine sales picking up without domestic poultry prices picking up?
A: Yes, we are on the road to recovery. In fact, if you would have heard Priya Gandhi speak, she did mention that there is an upswing in our poultry sales of vaccines as well as on health products. So we are now confident that there is an upswing towards this. Another point to be noted is that the feed prices have now stabilized, rather gone down in some cases. So it is a big relief to poultry farmers at this point of time. And egg prices are even up.
Q: Sir, so in Q4 of FY '21, the 3 years back, sir, we did INR 53 crore revenue in our Poultry division, which has now come down to some less than INR 35 crore. Sir, so by when do you foresee our quarterly Poultry division revenue again go back to the peak sale of INR 53 crores per quarter that we did in Q4, FY '21?
A: See, you are referring to a quarter when there was an outbreak in the country on Avian influenza and there was a very big demand for poultry vaccines and health products towards curative and preventive control of Avian influenza. So if there is an outbreak, it can definitely shoot up at any point of time. So we can't foresee -- we cannot predict an outbreak, but let's put outbreaks on a side. We cannot have the basis of an outbreak sale as the basis of our whole business. Poultry division is now growing and it will continue growing.
Q: Sir, so would you like to quantify any kind of a number like 10% growth, 15% growth? What kind of growth are we expecting?
A: We -- as a company, we are looking at a high growth, but it would not be appropriate for us to make a percentage commitment on a call like this, because it would just be rather inappropriate to make a call without -- I mean, we have done all our calculations, everything internally, but it -- we see a double-digit growth for sure.
Q: Sir, and also, sir, lastly, sir, in our Animal Health division, like you have mentioned that the 2 products which have been banned, we have launched another CurX substitute. Sir, so how much time in your judgment it will take for this new product to claw back our sales that we have lost?
A: I think it is -- I mean, it's very difficult really to say in -- I mean, I can't tell you in 1 or 2 quarters. But I mean, already it's showing very promising results. And in Q4, whatever efforts that we have taken in terms of the launch strategies that we had with the -- in the field, et cetera, is definitely going to show us results in the next Q4. I think in the next 1 year, I think it should be able to replace it.
Q: Mr. Gandhi, my question was on our Africa business. Now we've got the plant in place, the registrations are coming in place. Do you see availability of dollars in African countries as it's constrained -- as a new constraint that might come up that might act as a hurdle on our ability to fill out that entire plant there?
A: What you have perceived is definitely true. Countries do not have foreign exchange. In fact, 3 of the countries where we have reasonable large-sized orders, namely Egypt, Ethiopia, Nigeria, all the 3 have a dollar constraint at this point of time. So yes, it is a world order that we have to live with and we are trying to cope up the situation in these circumstances. But having said that, the poultry, the cattle industry has to grow in those countries or even has to be kept at the bare minimum level. So I'm sure in days to come we will find solutions, because this cannot become a permanent feature. And on the second side, we are ourselves pushing a lot of domestic sales in Tanzania itself. So that is also an aspect which we are looking at.
Q: And given all these global conflicts that we are seeing now and the need for a lot of countries also to fund reconstruction in Ukraine, rebuilding Gaza. Do you see -- again, I guess our PPR orders are also dependent on the UN getting funding from global powers. So what's your considered view on the PPR opportunity now in light of how the world has changed?
A: I'll tell you. There are financial constraints that the United Nations also has. We are all aware of it. There is nothing new in this. What we have done is, we are pushing trade, pushing sales through the private channel. All across, we are now trying to create our distributors and make sure that we go by the private route. One thing is that the rates that we get in -- through the private sector are definitely higher than that as far as the rates that we are offering into tenders. But of course, there is a market creation activity also that is required. So that's the way we are working towards it. And just to clarify, if at all, you may not be aware or if you're aware, I do not know. PPR as a disease is not there in EU. EU and the West, the Northern Hemisphere are mainly the financiers and the funding agencies, the developed countries for United Nations, and also some of these countries do direct funding with African countries. So I mean, just to make you aware on that.
Q: Sir, in your press release, you have mentioned something about Newcastle disease that you are launching a modified version of it. I just wanted to know how big it was for you and in the modified version, what kind of -- how does this opportunity was?
A: Yes. So the Newcastle disease vaccine, ma'am, if you see -- I mean, everyone is aware, our poultry vaccine portfolio has always been big in terms of the top line always and the Newcastle disease vaccine, within the vaccine is almost about 60% to 70% of within that portfolio. This modified version that we have created, it doesn't increase any of our market share, but what it does is it just improves the performance of our already existing vaccine.
Q: And sir, in your press release, again, you have mentioned that in 2 quarters, you expect or envisage some improvement or turnaround in Africa situation. If you could just add a little
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
