Hester Biosciences Ltd Q4 and FY22 Results Shows Consolidated Revenue Up by 10%

Hester Biosciences Limited announced the audited financial results of Q4 and FY22.

Standalone Financial Highlights

Division-wise Revenues

(INR Crore)

Product-wise Revenues

(INR Crore)

• The sales of vaccines declined by 20% in Q4FY22, but grew by 5% in the year FY22. Sales in the corresponding Q4 of FY21 was benefitted by a major disease outbreak in the poultry industry which led to a one-time spurt in demand for poultry vaccines. The current year did not experience any such disease outbreak. Further, during the current year, the poultry farm economics also turned adverse due to rise in feed costs and decline in end-product prices. Inspite of a large base effect and adverse demand environment, Hester posted 5% growth in vaccine sales for FY22.
• The sales of health products registered growth of 29% in Q4FY22 and 44% in the year FY22, largely driven by new product introductions and geographical expansion.
• Revenue from operations for Q4FY22included one-time license and services fees of INR0.20 crore and for whole year FY22 it included a total of one-time license and service fees of INR 3.85 crore as against the one-time license and service fees of INR 6.86 crore and INR 17.57 crore respectively for the corresponding earlier periods.

 Profitability Analysis

(INR Crore)

• On an annual basis, gross profit margins on product sales have been marginally impacted due to increase in proportion of sales of Health Products which have lower gross margin, coupled with an increase in raw material prices. This in-turn was not fully passed on to customers due to prevailing poor farm economics in the poultry industry.
• The collection cycle was disrupted and the payments were delayed due to industry conditions.
• Operating EBITDA and EBITDA margins declined due to:

1. One-time license and service fees as explained above, and
2. Higher spends on market expansion in the animal health division.

• PAT margin was also impacted due to the above reasons.
• Return on capital employed declined from 17% in FY21 to 13% in FY22 partially on account of reduction in PAT margin and partially due to increase in capital work in-progress for future expansion.

Consolidated Financial Highlights

                                                                                                                        (INR Crore)

The consolidated performance mainly includes the impact of the turnaround at Hester Nepal. Hester Nepal has seen a growth of 193% in FY22 sales and a net profit of INR 2.29 crore in FY22 as against a loss of INR 0.97 crore in FY21. We expect to achieve further increase in sales during the coming year upon the commencement of supplies under the FAO tenders for the PPR vaccine. Nepal’s domestic market is also building up for our live and inactivated vaccines.

Hester Africa has received the regulatory approvals for the manufacturing of PPR and CBPP vaccines. The production of these vaccines has commenced and are meeting the quality parameters. The impact of its sales will be seen in FY23. This project will enable Hester to become a leading player in Africa and contribute significantly towards the social as well as economic growth of the African continent, besides adding to the top-line and bottom-line of Hester.

During Q4FY22, Hester India acquired 50% equity stake in Threshold Exim Limited, Tanzania, a distribution company of vaccines and animal health products in Tanzania. This acquisition will help strengthen the distribution network of Hester in the African continent.

Status on Hester’s initiatives in Covid-19 vaccine

• The company, in consortium with Gujarat Biotechnology Research Centre (GBRC), Government of Gujarat (GoG), has entered into a term sheet agreement with Bharat Biotech India Limited to manufacture the Drug Substance for Covaxin.
• The project is to manufacture Drug Substance equivalent of up to 70 lakh doses per month, for supply to Bharat Biotech.
• The construction of BSL-3 facility is nearing completion; planning & preparation for commissioning has commenced.
• The company has received approval from Biotechnology Industry Research Assistance Council (BIRAC) under Mission Covid Suraksha for a grant of INR 60 croreto be received in phased manner upon completion of specified milestones.
• This facility is designed to be a multi-purpose facility to handle other micro-organisms beyond Covid-19.

Other developments

1. The company was awarded national tender for supply of 20 crore doses for PPR by the Department of Animal Husbandry and Dairying (DAHD) for the eradication of the PPR disease nationally in a span of two years. There is a delay in receiving the supply orders, and is expected to commence in Q1 FY23.
2. The development of new vaccines for Classical Swine Fever (CSF), Lumpy Skin Disease (LSD) and Sheep Pox is going on.
3. The company is expected to launch the modified Inactivated Coryza Vaccine (an advanced version of the conventional Coryza Vaccine from the existing poultry vaccine portfolio) in this year.