VIYASH

Viyash recorded strong Q4 FY25 performance with revenue growing 15% YoY to ₹370 crores and adjusted EBITDA surging 93% YoY to ₹65.3 crores, achieving a 17.6% margin. For the full year FY25, Viyash's consolidated revenue reached ₹1,458 crores, an 11.2% increase over FY24, with adjusted EBITDA growing 52.4% to ₹254.6 crores and an EBITDA margin of 17.5%. The company also generated a healthy free cash flow of ₹201 crores and reduced its debt by ₹145 crores, resulting in a current debt of ₹74 crores and a net debt/EBITDA ratio of 0.3x.

SeQuent Scientific delivered a strong Q4 FY25, with revenues of ₹401.7 crores, marking an 11.2% YoY growth and 2.8% QoQ growth. The formulations business grew 22% YoY, contributing ₹301.5 crores, while the API business saw a 7% QoQ growth to ₹86.9 crores. The company's gross margin improved by 420 basis points YoY to 50.3%, and pre-ESOP EBITDA grew 38.7% YoY to ₹56.91 crores, translating to a 14.2% margin. For the full year FY25, SeQuent's revenue grew 13.3% to ₹1,551.4 crores, and pre-ESOP EBITDA increased 18.6% to ₹199.3 crores, with the EBITDA margin expanding by 500 basis points to 12.9%.

The strategic merger of Viyash Life Science Limited and its subsidiaries, along with SeQuent Research Limited, into SeQuent Scientific Limited is progressing well, having received Board and CCI approvals. Stock exchange approval is currently underway, with NCLT clearance to follow, and the merger is expected to close within 12-15 months. The combined entity's Q4 FY25 adjusted EBITDA was ₹120 crores with a 15.8% margin, and for FY25, it reached ₹450 crores with a 15.1% margin. The combined net debt/EBITDA ratio improved to 1x from 1.2x last quarter, with a target to reach a top line of ₹4,000 crores and a margin profile closer to 20% in the next 2-2.5 years.

Viyash is focusing on expanding its CDMO business and complex product development, leveraging its R&D, manufacturing, and intellectual property strengths. The company has signed 3 new contracts in the last 6 months and 10+ development contracts over the past 2 years, including life cycle management for innovators and complex generics. Management expects substantial sales from CDMO expansion next year, with a target of 20% revenue growth from CDMO by FY27. This strategy aims to generate revenue from R&D and validation, along with profit sharing from commercial sales.

Margin expansion for Viyash is driven by new product introductions, with 10-15 differentiated or complex products developed and 6-8 launched annually, offering good margins. Additionally, operational leverage from current capacity utilization of 60-65% contributes to opex reduction as revenue grows. For SeQuent, margin improvement in formulations is driven by a better product mix, including higher-margin companion animal products, and new product introductions. The API business also benefits from a new R&D pipeline, CDMO arrangements, and surplus capacity leading to opex leverage.

Management clarified that the ₹102 crores of exceptional item^📎s reported in FY25 are primarily one-time^📎 merger-related costs, including accelerated share warrants and contractual obligations, which are expected to largely go away in FY26. The ₹100 crores of amortization related to acquisition intangibles will remain in FY26 (potentially decreasing) but will fully cease in FY27. Post-merger, the combined entity is expected to be more or less debt-free, leading to a significant reduction in interest costs, as Viyash itself aims to be debt-free in FY26.