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    Viyash Scientific Limited

    VIYASH
    Healthcare·11 Aug 2025
    Management Summary

    Viyash reported a strong Q1 FY26 with revenue growing 4% year-on-year to INR353 crores and adjusted EBITDA increasing 19% to INR68 crores, driven by margin expansion to 19.5%. The combined entity with Sequent Scientific also demonstrated robust performance, with revenue up 8.7% and EBITDA up 21% year-on-year, and a significant improvement in net debt to EBITDA to 0.6x. The merger process is progressing as planned, and the company successfully navigated multiple regulatory audits, highlighting its strong quality culture.

    Highlights

    6

    • Viyash revenue growth of 4% YoY to INR353 crores.

    • Viyash adjusted EBITDA growth of 19% YoY to INR68 crores.

    • Viyash EBITDA margins improved by 2.4% YoY to 19.5%.

    • Combined entity revenue grew by 8.7% YoY and EBITDA by 21% YoY.

    • Successful completion of 5 regulatory inspections, including 2 US FDA audits, with EIS received.

    • Merger process with Sequent Scientific on track with CCI and SEBI approvals received.

    Concerns

    2

    • Viyash's revenue growth of 4% YoY is relatively modest compared to its EBITDA growth.

    • India formulations business was relatively subdued due to seasonality in Q1.

    What Changed2

    vs Q2 FY26

    Guidance items10 → 4 (-6)Q&A highlights8 → 6 (-2)

    Key financials

    Single quarter

    08 metrics
    1. 01Viyash Revenue₹353 Cr+4%YoY
    2. 02Viyash Adjusted EBITDA₹68 Cr+19%YoY
    3. 03Viyash EBITDA Margin19.5%+2.4%YoY
    4. 04Combined Revenue Growth—+8.7%YoY
    5. 05Combined Adjusted EBITDA Growth—+21%YoY

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Debt

    0.6x EBITDA

    M&A

    Sequent Scientific Limited

    merger · pending regulatory

    Guidance & targets

    4
    CategoryTargetPriority
    Margin
    Viyash EBITDA Margin
    20-plus margins
    		High
    Margin
    Combined EBITDA Margin
    around 20%
    		High
    Business Development
    CDMO Business Strength
    very strong
    		High
    Business Development
    Companion Animal Health Business Growth
    double
    		High

    Merger completion with Sequent Scientific

    Next quarter (post-August 30, 2025)
    CurrentNCLT meeting scheduled for August 30, 2025, CCI and SEBI approvals received.
    TargetMerger process completed, integration initiated.

    Why it matters

    The merger is a major strategic event expected to drive significant synergies and growth for the combined entity.

    The NCLT has called for a shareholders' and creditors' meeting, which is scheduled on August 30, 2025, keeping us well on track to complete the merger process as per the estimated time lines of 12 to 15 months from the merger announcement date done in September 2024.

    How to verify

    capital_allocation.m_and_a[target='Sequent Scientific Limited'].status

    Risks & concerns

    3
    RiskSeverity

    US regulatory environment (Biosecure Act, pharma tariffs)

    Management believes there is more opportunity than issue, with limited direct exposure (17-18% of total exposure to US market, including indirect). — Analyst downplayed

    low

    Input costs rising due to dollar strengthening

    Management states no risk as exports are significantly higher than imports, providing a natural hedge. — Analyst downplayed

    low

    Seasonality affecting India formulations business

    Q1 was relatively subdued due to seasonality, but the company expects double-digit growth on a full-year basis. — Management acknowledged

    low

    Q&A highlights

    6

    “No, I think our perspective, I see more opportunity than issue. Why? Because current our exposure, of course, SeQuent exposure is not is very little for US And Viyash API exposure, direct exports are very little, in fact, I think 2%, 3%. But overall, it may impact indirect exports also, whatever we supply to Indian companies where they formulate and export, there may be impact. But all put together, it's around 17%, 18% of our exposure on the US market today.”

    Addresses a significant geopolitical and regulatory risk, clarifying the company's limited direct exposure and overall positive outlook due to strong regulatory compliance.

    asked by Kaustav

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 FY26 Performance for Viyash and Combined Entity

    Viyash reported a robust Q1 FY26, with revenue growing 4% year-on-year to INR353 crores and adjusted EBITDA increasing 19% year-on-year to INR68 crores. This led to an improved EBITDA margin of 19.5%, up 2.4% from the previous year. The combined entity (Sequent Scientific and Viyash) also demonstrated strong performance, achieving 8.7% year-on-year revenue growth and 21% year-on-year EBITDA growth, with adjusted EBITDA reaching INR129 crores at a 16.2% margin. The combined net debt to EBITDA ratio improved to 0.6x, down from 1x in the prior year.

    02

    Merger Progress and Synergies

    The strategic merger with Sequent Scientific is progressing as planned, having received approvals from the Competition Commission of India and Stock Exchanges. An NCLT meeting is scheduled for August 30, 2025, keeping the process on track for completion within 12-15 months from the September 2024 announcement. Management anticipates significant synergies post-merger, particularly in R&D integration, procurement, and manufacturing network optimization, which are expected to drive P&L and balance sheet improvements in the coming quarters⏳.

    03

    Regulatory Compliance and R&D Focus

    Viyash successfully completed five regulatory inspections last quarter, including two US FDA audits, both of which received EIS, demonstrating the company's strong quality culture. The company validated three new products and filed 12 products across various countries, alongside five finished dose products in the US. This strong R&D capability is crucial for future growth, with a pipeline of over 20 products and an expectation of 10-15 product developments and filings this year.

    04

    US Market Outlook and Limited Exposure to Geopolitical Risks

    Management views the US market as an opportunity rather than a significant risk, despite discussions around the Biosecure Act and pharma tariffs. Viyash's direct API exposure to the US is minimal (2-3%), with the combined entity's total exposure, including indirect exports, being around 17-18%. The company's strong regulatory track record, including successful US FDA audits, positions it well to capitalize on opportunities in the US generics animal health market.

    05

    Strategic Growth Initiatives and Margin Expansion

    Viyash aims for medium-term EBITDA margins of 20-plus, and the combined entity targets 20% by 2027, driven by network optimization, cost improvements, and a better product mix. The company is actively working on taking out low-margin, low-volume products and substituting them with new, higher-margin offerings. Capacity utilization at Viyash is currently 60-65%, providing headroom for growth, while Sequent's sites are fully utilized.

    06

    CDMO and Companion Animal Health Business Development

    The company is actively building its CDMO business, aiming for a strong presence within the next 12-18 months, leveraging its infrastructure and relationships with top innovator companies. Additionally, the companion animal health business, currently representing about 5% of total business, is targeted to double in the next three years through organic growth and new product launches, including an anesthetic range.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.