Hester Biosciences - Company Update - ICICI Securities

FY20 revenues grew a mere 2.9% mainly due to 4% decline in poultry segment (66% of revenues) amid lower vaccination drive due to sharp increase in maize prices and Covid-19 (C19). Animal healthcare segment grew 22% YoY to Rs. 139.6 crore (26% of revenues), driven by strong export growth and lower base. EBITDA margins contracted 798 bps YoY to 30.2% mainly due to increase in field force count (140-150 from 80) and negative operational leverage. EBITDA de-grew 18.6% YoY to Rs. 55.4 crore. PAT fell 29.8% to Rs. 29.2 crore due to a below expected operational performance.

Valuation & Outlook

The poultry vaccine business faced significant headwinds in FY20 as a sharp spike in maize prices (accounting for ~50% of feed cost) hampered the vaccination drive among poultry farmers. Just when things were returning to normalcy, came the Covid disturbance. Uncertainty remains upon normalisation of chicken, egg consumption pattern to pre-Covid level. The animal health segment, on the other hand, is expected to remain strong due to tenders and strong export potential. However, fortunes in the poultry segment would continue to weigh on sentiments. We arrive at a target price of Rs. 1190 based on 22x FY22 EPS of Rs. 54.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Hester_CoUpdate_Jun20.pdf

Shares of HESTER BIOSCIENCES LTD. was last trading in BSE at Rs.1215.95 as compared to the previous close of Rs. 1210.9. The total number of shares traded during the day was 237 in over 46 trades.

The stock hit an intraday high of Rs. 1217.15 and intraday low of 1201.6. The net turnover during the day was Rs. 286331.

Source : Equity Bulls

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