Hold Hester Biosciences; target of Rs 1765: ICICI Direct

ICICI Direct's research report on Hester Biosciences

Q2FY21 revenues grew 20.8% to Rs 53.4 crore mainly due to 27.8% growth in poultry segment to Rs 34.3 crore as feed price stabilised and demand for milk and eggs improved. Animal healthcare segment grew 16% YoY to Rs 13.8 crore. EBITDA margins improved 458 bps YoY to 29.6% mainly due to lower staff & other expenses, partly offset by lower gross margins. EBITDA grew 43% YoY to Rs 15.8 crore. PAT grew 2.4% to Rs 6.7 crore in line with operational performance and a higher tax rate.

Outlook

The management intends to move away from preventive healthcare to curative healthcare as a long term strategy. We maintain HOLD and arrive at a target price of Rs 1765 based on 30x FY23E EPS of Rs 58.8.

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