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Viyash Scientific
Our verdict on Viyash Scientific isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The R&D pipeline has expanded to 17 products as of Q3 FY26. (1 exceeded across 1 tracked commitment)
“We started actually relooking at our R&D expansion. This year, you can see definitely our R&D expansion, both space as well as people. So next year, we will come up with strong CDMO.”
The company has significantly surpassed the 'high teens' target, achieving a 21% EBITDA margin in the first reported quarter of the merged entity. (2 exceeded, 3 met across 5 tracked commitments)
“You would recall that a few quarters ago, we had set ourselves a target of crossing 15% EBITDA and moving to high teens. We are now firmly on that path while also improving our profit after tax substantially.”
Management confirmed that the field force expansion to 200 personnel in the previous year is now yielding results in the Indian Animal Health segment. (1 met across 1 tracked commitment)
“We expect the impact of our field force expansion to kick in during the second half of the year. As we have said earlier, India remains a key market for us to develop.”
The company has already executed 8 launches in the current year, meeting the annual target within the first half of the fiscal year. (2 met, 1 in progress across 3 tracked commitments)
“And currently, we have around 20-plus products on the pipeline and we are actually expected 10 to 15 products development as well as filing this year as anticipated.”
SeQuent's standalone API sales for Q2 FY26 were INR 83 crore (830 Mn), failing to meet the INR 100 crore quarterly run rate target. (1 missed across 1 tracked commitment)
“And also most important factor to sustain US business today is a fully vertical or backward integrated for all our key products. We are done for almost all our key products 45% of our volume products we are done.”
See the full cited Management analysis of Viyash Scientific
How durable is the business?
The company has significantly strengthened its distribution moat in India through an exclusive agreement with global giant Boehringer Ingelheim for pet products. (1 expanding across 2 engines)
“Formulations revenue grew 20% to 4.8 billion. While API revenue rose 2.9% to 3.6 billion.”
The India business is expanding through field force additions and new product introductions, with a second phase of expansion planned for FY26. (3 expanding, 1 stable)
“The formulations business in India... has resulted in a 13% year-on-year sales growth, which we expect to accelerate in the coming year.”
The R&D moat is expanding with the addition of Viyash's capabilities, bringing the total R&D resource count to over 200 and focusing on complex generics and oncology. (3 expanding, 1 shifted)
“Roughly we have 200 plus scientists including 20 plus doctorates and we have dedicated support team for CDMO... having specialized capabilities such as cytotoxic handling and process safety infrastructure.”
The company is shifting focus toward CDMO (Contract Development and Manufacturing) for complex generics and innovators, leveraging its R&D capabilities. (1 shifted, 1 expanding)
“Yes, absolutely. This year, that's one of the key focus, actually expanding CDMO business as well as complex products development.”
The USA segment is now specifically identified as 'USA (Human Health)' following the Viyash merger update, contributing 23% of combined Formulations revenue. It is a key pillar of the 'Sequent 3.0' strategy. (3 shifted, 1 new, 1 expanding)
“USA (Human Health) 23% of FY25 Formulations Revenue”
See the full cited Business Model analysis of Viyash Scientific
Where does growth come from?
The combined entity (SeQuent + Viyash) is showing accelerating revenue growth, with the full year FY25 reaching ₹30,094 Million, a 12.3% increase over the previous year. (5 accelerating across 5 signals, 1 leading indicator)
“Revenue from operations for Q3 FY'26 was INR 858 crores grown up by 11% year-on-year.”
Viyash continues to improve its gross margins through vertical integration, with Q1 FY26 gross profit margins reaching 58.0%, up from 53.5% in the prior year. (2 accelerating, 2 new trend, 1 steady across 5 signals, 1 leading indicator)
“And also most important factor to sustain US business today is a fully vertical or backward integrated for all our key products. We are done for almost all our key products 45% of our volume products we are done.”
The CDMO segment is a new and accelerating trend for the company, with 3 new contracts signed recently and a focus on complex generics and innovator life cycle management. (1 accelerating, 4 new trend across 5 signals, 1 leading indicator)
“CDMO market size in India ($Bn) 2024: 23, 2029: 45 (2x)”
The company is actively positioning its R&D pipeline to capture the patent cliff, with 25+ products currently in the Viyash R&D pipeline and 10+ First-to-File (FTF) products in the new portfolio. (4 new trend across 4 signals)
“2025-2030 patent cliff: Large number of APIs coming off patent... estimated opportunity of ~$250bn-300bn”
Formulations growth is accelerating, particularly in Emerging Markets which saw a 42% YoY jump in Q4 FY25, while the overall segment grew 19% for the full year. (5 accelerating across 5 signals, 2 leading indicators)
“Formulations 4,809 4,009 20%”
See the full cited Future Growth analysis of Viyash Scientific
What could break the thesis?
The company successfully cleared audits by key customers and maintained its 10 USFDA approved plants. Viyash completed 3 regulatory audits and 28 customer audits in Q4 FY25 without reported adverse findings. (5 stable, 1 high-severity)
“3 Regulatory Audits 45 Customer audits Facility Inspections”
Exceptional items remain a significant drag on reported profits, totaling INR 1,029 Mn for the combined entity in FY25, primarily driven by merger expenses and contractual bonuses. (2 intensifying, 3 easing, 2 high-severity)
“Net debt-to-EBITDA has reduced to less than 4x, a significant strengthening versus the previous year.”
Viyash saw a 3% sequential revenue decline due to inventory buildup at a customer's end for the US formulation facility, confirming ongoing demand/phasing volatility in this segment. (2 intensifying, 1 easing, 2 stable)
“initially post COVID there is a lot of stock build up. There is a lot of competition coming from India. That's initially we struggled a little bit on competing the cost from US side.”
The risk is stable; while timelines remain long (12-24 months for some processes), the company received 5 API approvals and 1 finished dose approval this quarter. (2 stable)
“Some of those things started getting approval next few months but as I explained last call also, it takes 4 months to 18 months.”
The risk is easing as the company reported a 270-bps improvement in gross margin and a significant rise in EBITDA margins to 15.5%, suggesting one-time costs are being absorbed by operational gains. (2 easing)
“there was a 270-bps improvement in gross margin, and the pre-ESOP EBITDA rose to INR657 million, and that came in at a 15.5% EBITDA.”
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Viyash Scientific analysis by filing period
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