India’s leading animal healthcare companies has reported 9.7% and 11.7% yoy growth in the net sales PAT. EBITDA margins during the quarter were at 39.5% vs. 32.4% in Q3FY17. The margin expansion came on the back of the decline in the material cost.
Its poultry business (86% of net sales) grew by 7.9% yoy while large animal business (14% of the net sales) grew by 22% yoy. The contribution of the large animal business has gone up by 144bps yoy. Both the business has shown strong improvement in the profitability with EBIT margins of poultry business expanding by 210bps to 29.3% and EBIT margins of large animal business doubling from 39.1% in Q3FY17 to 79.8% Q3FY18.
Hester BioSciences is in the business of manufacturing vaccines, health products, diagnostics products for poultry and animals. Hester's product portfolio includes over 50 vaccines and 35 health products. The company currently has one manufacturing facility located in Gujarat. The company has delivered a revenue and PAT CAGR of 15.9% and 15.1% over FY08-17.
This is a good result considering strong margins expansion. The stock however is currently trading at 59x of FY17 EPS and 42x of FY20E EPS.