SeQuent Scientific: A Transformational Leap in Animal Health

SeQuent Scientific Limited, a prominent player in the global Animal Health industry, has unveiled its Q2 FY26 performance, showcasing robust growth and strategic advancements following its merger with Viyash Life Sciences Private Limited. The National Company Law Tribunal (NCLT) recently approved the merger, marking a pivotal moment for the combined entity. This strategic consolidation has positioned SeQuent as India's largest animal health player, poised for significant expansion and enhanced capabilities.

For Q2 FY26, the combined entity reported impressive sales of INR 852.1 Crore, reflecting a healthy 16.4% year-on-year growth. This top-line expansion was complemented by a remarkable surge in EBITDA, which grew by 75.6% year-on-year to INR 189 Crore. The EBITDA margin also saw a substantial improvement, reaching 22.2% in Q2 FY26, up from 14.7% in the previous year. For the first half of FY26 (H1 FY26), combined revenues stood at INR 1,646.2 Crore, with EBITDA at INR 318 Crore, representing 12.6% and 48% year-on-year growth, respectively. The company's net debt to LTM EBITDA ratio also improved significantly to 0.7x from 1.4x in Q2 FY25, indicating a stronger financial position.

Strategic Pillars for Growth

The management's commentary highlighted several strategic initiatives driving this performance. The merger with Viyash Life Sciences is a cornerstone of this transformation, expected to unlock significant manufacturing, R&D, and customer synergies. The company is already witnessing benefits from this integration, with Viyash consistently delivering strong performance in new filings, sales, and margins. The merged entity is now strategically positioned to build new revenue streams and accelerate the growth of existing businesses.

New product introductions have been a key growth driver. SeQuent successfully launched 'Tulaject' in Brazil and secured Marketing Authorization for Mexico, expanding its footprint in emerging markets. A new product was also introduced in the US market. The company's R&D infrastructure has been expanded, and field team expansion in India is underway, expected to yield results in the second half of the year.

Operational Excellence and Integration

Operational efficiencies are being enhanced through backward and forward integration. The company is actively bringing intermediate and API production in-house, reducing reliance on third parties, and significantly improving gross margins. This vertical integration strategy ensures that a substantial portion of new finished products are fully integrated, leading to better cost control and quality. Furthermore, the company has rationalized three manufacturing sites and moved its analytical center to internal sites, optimizing costs and ensuring quality compliance.

SeQuent is also focusing on high-growth segments. The combined entity is aligned to capitalize on the fast-growing Companion (Pet) Animal Health segment, driven by increased pet adoption and demand for advanced treatments. Additionally, the genericization of Animal Health, which lags behind Human Health, presents a substantial opportunity for the company to leverage its technical strengths in APIs and formulations. The advanced capabilities in R&D are also bolstering its fast-growing Contract Development and Manufacturing Organization (CDMO) business.

Outlook and Investor Confidence

Management expressed confidence in sustaining the positive momentum. They anticipate double-digit growth for the formulations business and expect Viyash to achieve a CAGR of over 20% in the next 3-4 years. The company aims to be debt-free by FY27 and does not foresee major capex requirements in the API segment for the next two years. The focus will be on organic and inorganic growth, particularly in companion animals, and further strengthening its manufacturing base in India.

While the company acknowledged some one-off items like customer claims, hyperinflation adjustments, and exceptional merger-related costs, these were transparently disclosed. The extensive details on pending tax disputes in the NCLT order, along with the company's proactive steps to address them, demonstrate a commitment to transparency. The overall tone of the management commentary was balanced, acknowledging both achievements and areas for ongoing work.

SeQuent Scientific's Q2 FY26 results and strategic updates paint a picture of a company undergoing a significant transformation. With the merger now approved, a clear focus on high-growth segments, operational efficiencies, and a strengthened balance sheet, SeQuent is well-positioned to deliver sustained profitable growth and create long-term value for its stakeholders.