Mr.Abhishek, what is your take on them partnering with IIT Guwahati on covid. It’s an engineering college , not medical !
Basically, a waste of time 
Till I find out otherwise!!
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IITs do have departments related to applied sciences. They are not purely enginnering colleges. They are Universities.
A research group at IIT Guwahati (Department of Biosciences and Bioengineering) is indeed working on COVID Vaccine. They have collaborated with Hester.
NB: I have no views on Hester’s collaboration.
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Their sales to fixed assets (with 2 year lag) correlation at 75% looks very healthy to me.
| Sales | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| 41.86 | 48.16 | 64.93 | 68.69 | 89.65 | 100.51 | 123.11 | 135.94 | 178.07 | 183.27 |
| 15.05% | 34.82% | 5.79% | 30.51% | 12.11% | 22.49% | 10.42% | 30.99% | 2.92% | |
| 88.23% | -75.32% | 75.58% | Sales FA correlation | ||||||
| 1 yr lag | 2 yr lag | ||||||||
| Fixed Asset (Net block + Capital WIP) | |||||||||
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| 39.22 | 45.70 | 66.62 | 74.37 | 92.20 | 101.09 | 123.77 | 141.89 | 151.65 | 216.40 |
| 16.52% | 45.78% | 11.63% | 23.97% | 9.64% | 22.44% | 14.64% | 6.88% | 42.70% |
Decent results.
Some key takeaways:
- Animal healthcare division growing fastest as indicated by management in the last quarter. Although increased sales of health products has lead to lower gross margins.
- GOI extended implementation for Brucella which is now expected in Jan-21.
- Entry in to Lumpy Skin Disease (LSD) for cattle which is an emerging disease in India. Hester is currently developing this, has plans to commercially launch the vaccine within six months and is the only company in India who has an LSD vaccine under development.
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Tax paid is almost 37.5% on PBT which is very high.
What could be the reason ?
Q2 FY 2021 Conf Call Notes
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Overall this quarter 30% rise in sales
- Poultry: Revenue 21% growth
- Animal Health: Revenue 41% growth
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Feed prices are stable, feed cost for cattle stable now. Q3, Q4 should be better.
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Growth by products
- Vaccines: 26% revenue growth
- Health Products and curative medicine: 51% revenue growth
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In recession curative medicine is sold more and vaccines are sold less. This is the reason for better growth in the health products division.
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Growth by geography
- Domestic Sales: 30% growth
- Exports: 36% growth
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FMD (Food & Mouth Disease) & Brusella govt of India initiative to immunize the cattle. They are into Brucella Vaccine. Largest vendor for Brucella . They don’t manufacture FMD vaccines but may do so in future.
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Emerging disease: Lumpy Skin Disease: No curative medication, only preventive using vaccines. Currently under development, 6 month timeline. No other vaccine provider in India for LSD. Huge opportunity. Expansion Plan for Lumpy Skin Disease and Brucella.
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Exploring natural products. Europe moving away from antibiotics to natural products. In future India may do the same if it wants to export meat, eggs etc. as antibiotics leave residue which lead to rejection of export consignments.
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Subsidiaries:
- Hester Nepal: Rough Time. Non availability of aircraft movement from Kathmandu.
- Texas Lifescience: No drop in sales. Now there is marginal increase
- Hester Africa- Minor delay of around 30-60 days due to covid.
- Tanzania:
- Q2 was impacted, as there was a reasonable downturn.
- Co. is creating a network for sales.
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Registration of a number of vaccines ongoing in African Countries.
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Opportunity Size of vaccination programme:
- Brucella: 100cr
- PPR: 12 cr
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India Market Share:
- Brucella: 80% share
- PPR: 70% share
- Lumpy Skin: 30 cr cattle
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In Nepal they have licenced other vaccines too during the lockdown. So it can supplement Indian production.
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Brucella, Lumpy Skin are not one time. There is very less chance for them to be eradicated. Brucella is a one time lifetime vaccine. New born calves still require them, and need to be vaccinated 3-8 months.
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Max Revenue
- Africa: At full capacity 200 cr revenue. At Least 10cr revenue this year.
- Nepal (15 cr capex): 50-60 cr max revenue. Breakeven would be less than 15 crores.
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Hester Biosciences Nepal launches a Live Thermo-tolerant PPR Vaccine
With temperature tolerant nature last mile delivery of vaccine would be easy.
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Was skimming through the past concalls and found something on Bird Flu or Avian Influenza that Hester shared in February last year. Sharing extracts from the concall-
Would anyone have more details on this vaccine and how Hester can benefit from it in the longer term? Also, any update on it if this 2.5 years that they mentioned can be fast-tracked. If the vaccine has been developed then why would it take so long to start seeing sales?
Disc: Tracking.
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Topline increasing in Tanzania, with completion of current expansion in june 21 Bottom line will start improving.
Hester acquires technology from ICAR – IVRI for the production and commercialization of
Classical Swine Fever Vaccine & Sheep Pox Vaccine
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Launch of Herbal Veterinary Products
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Opportunity might come to Hester.
COVAXIN® has received Emergency Use Authorizations in several countries across the globe
with another 60 in process. EUA’s have now been obtained from Mexico, Philippines, Iran,
Paraguay, Guatemala, Nicaragua, Guyana, Venezuela, Botswana, Zimbabwe, among several
other countries. EUA’s are in process in the USA and several European countries. Pricing for
international markets and supplies to govt’s under EUA’s have been established between $15 -
20 / dose.
Gourmet is too large and can be shared on Royalty basis before it’s exploited by Foreign Parties
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List of Human Vaccine Manufacturers India
https://cdsco.gov.in/opencms/export/sites/CDSCO_WEB/Pdf-documents/biologicals/facilitiesLIST.pdf
Good Article with detailed information about Bio Safety Level 3 Labs
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This maybe the reason for the sudden Price-Volume Action in Hester.
Lets see how things pan out
Regards,
Vikas
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When the news first came about Hester’s vaccine collaboration with IIT Guwahati, I felt like this is an attempt to catch lightning in a bottle, as in it was not only risky but also impossible. It’s been one year now and I don’t seem to find an update on their collaboration with IITG but the discussions with Bharat Biotech now seem to be more relevant and need of the hour. I do understand that Covaxin needs BSL3 facility and not sure if Hester has one. But I must admit I will be less skeptical now than I was last year. This also demonstrates how one’s own narrative can change over a period of time.
P.S I also see they have hired an Immunologist/Vaccine Scientist in Nov 2020, so they seem to be walking the talk.
Disclosure: No trades in the last 4 years
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Here is the clarification form Hester Management
2f2a73f6-d165-460a-bf92-dac316d77700.pdf (477.9 KB)
Regards,
Vikas
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