💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, the Formulations segment grew 18.6% YoY to INR 3,364 million, while the API segment grew 7.3% YoY to INR 830 million. For H1 FY26, Formulations revenue was INR 6,747 million (+15.6% YoY) and API revenue was INR 1,884 million (+11% YoY).

Geographic Revenue Split

As of H1 FY26, Europe contributed INR 3,172 million (36.6% of global sales), Emerging Markets contributed INR 2,949 million (34.1%), India contributed INR 625 million (7.2%), and API sales accounted for INR 1,884 million (21.8%).

Profitability Margins

Gross margins improved by 270 basis points YoY to 49.7% in Q2 FY26, driven by product mix optimization. Net Profit Margin for FY25 stood at 2%, a significant recovery from a negative 2% in FY24, reflecting operational turnaround.

EBITDA Margin

The combined entity reported an EBITDA margin of 22.2% in Q2 FY26, with EBITDA reaching INR 1,890 million, a 76% YoY increase. This improvement is attributed to manufacturing synergies and cost optimization following the Viyash merger.

Capital Expenditure

The company commissioned a new production block for large-volume products within 6 months to support SeQuent's capacity needs. While specific total INR Cr for future capex is not disclosed, the focus is on leveraging Viyash's existing infrastructure to reduce incremental spend.

Credit Rating & Borrowing

The Debt Equity Ratio improved to 0.54 in FY25 from 0.58 in FY24. The Interest Coverage Ratio significantly increased to 1.81 from 0.23, indicating a much stronger ability to service debt from operating profits.

⚙️ Operational Drivers

Raw Materials

Specific raw material names are not disclosed, but the company focuses on API manufacturing for products like Albendazole, where internalizing production is expected to drive margin expansion.

Capacity Expansion

A new production block was commissioned in record time (6 months) to support SeQuent's large-volume API products. This expansion is critical to address capacity constraints and support a market value of over $1 billion in partnered products.

Raw Material Costs

Raw material costs are managed through 'manufacturing optimization' and 'product optimization.' Gross margins rose from 47% to 49.7% YoY in Q2 FY26, indicating effective procurement and cost-saving strategies.

Manufacturing Efficiency

The company achieved a 270-bps improvement in gross margins through manufacturing optimization. Capacity utilization is being addressed by shifting SeQuent's large-volume production to Viyash's underutilized lines.

📈 Strategic Growth

Expected Growth Rate

20%

Growth Strategy

Growth will be driven by a 20% CAGR top-line target over the next 3 years through 8 new US product launches, expansion into the companion animal segment, and realizing synergies from the Viyash merger. The company has partnered on 20 products with a market value exceeding $1 billion, with major revenue streams expected to scale by 2030.

Products & Services

The company sells veterinary formulations and APIs, including specific products like Albendazole (anti-parasitic) and Tulaject (injectable). It also provides CDMO services, including validation and analytical services through SeQuent Research Limited.

Brand Portfolio

SeQuent, Viyash, and Tulaject (product brand).

New Products/Services

Launched Tulaject in Brazil and received Marketing Authorization for Mexico. 8 new launches were completed in the US this year, which are expected to be primary drivers for the 18% growth in the formulations segment.

Market Expansion

Expanding the field team in India to accelerate domestic growth and targeting the US market with new API partnerships and formulation launches.

Market Share & Ranking

SeQuent is India's largest pure-play animal health company.

Strategic Alliances

The merger with Viyash Life Sciences is the primary strategic alliance, aimed at creating an integrated R&D and manufacturing platform. The company also has CDMO partnerships with global innovators.

🌍 External Factors

Industry Trends

The veterinary pharmaceutical industry is shifting toward higher regulatory standards for post-market surveillance and drug safety. SeQuent is positioning itself as a high-quality partner by completing US FDA audits for its analytical labs and focusing on the growing companion animal segment.

Competitive Landscape

Competes primarily with global innovators in Europe and other generic specialty partners in the animal health space.

Competitive Moat

The company's moat is built on being a 'pure-play' animal health leader with a low-cost manufacturing advantage and a vertically integrated API-to-formulation model. This is sustainable because the Viyash merger provides scale and R&D capabilities that are difficult for smaller competitors to replicate.

Macro Economic Sensitivity

The company is sensitive to hyperinflation, specifically in Turkey, which required an Ind AS 29 adjustment of INR 51 million in H1 FY26.

Consumer Behavior

Increasing global demand for affordable veterinary healthcare and a shift toward companion animal care are driving product development priorities.

Geopolitical Risks

Geopolitical events are identified as market risks that could drive potential losses; the Board monitors these to ensure responsive decision-making.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to stringent US FDA audits (recently completed for SeQuent Research Limited) and global pricing controls/reimbursement policies in the veterinary sector.

Environmental Compliance

The company follows SASB standards and has implemented a Business Responsibility and Sustainability Report (BRSR) to track environmental impact and resource usage.

Legal Contingencies

The NCLT approval for the merger with Viyash Life Sciences was reserved on Oct 31, 2025, and pronounced on Nov 18, 2025. No other specific pending court case values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Key risks include regulatory interventions such as price caps and stringent reimbursement policies, which pose a material risk to revenue growth and long-term sustainability.

Geographic Concentration Risk

Europe and Emerging Markets combined represent approximately 70% of total revenue, making the company vulnerable to regional regulatory changes in these areas.

Third Party Dependencies

The company is moving toward vertical integration (e.g., internalizing Albendazole production) to reduce dependency on third-party API suppliers and improve margins.

Technology Obsolescence Risk

The company uses the Black Scholes model for ESOP valuation and maintains a Structured Digital Database for UPSI compliance to manage digital and regulatory risks.

Credit & Counterparty Risk

The company conducts regular analysis of receivables aging; Debtors Turnover Ratio stands at 82 days, indicating moderate credit risk.