Viyash Scientific Concall Summary: Key Highlights and Q3 FY26 Results

Guidance & Outlook

• Margin Sustainability: Management was explicit that 20%+ EBITDA margin is sustainable, citing diversification across Animal Health, Human Formulations, API, and CDMO, with weakness in one segment offset by strength elsewhere.
• FY28 Targets Pulled Forward: Management indicated the earlier aspiration of INR 4,000 cr revenue and 20% EBITDA by 2028 appears achievable by FY27, though this interpretation excludes some one-offs such as ESOP-related expenses.
• Synergy Run-rate: Management reiterated INR 50–60 cr synergy potential over the next 12–18 months, with current margins not yet reflecting full synergy capture.
• API Outlook: Management expects the API business to grow double digit in FY27, after stabilizing the base and crossing INR 400 cr revenue for the first time since 2022.
• CDMO Scale-up: CDMO/CMO revenue for FY26 is estimated at INR 70–90 cr, with management cautioning that meaningful scale-up typically takes 3–4 years from validation to commercialization.
• US Formulations: Management sees recovery in the US human formulations business hinging on India manufacturing transfers, backward integration, and more complex product launches, rather than broad market recovery.
• Regulatory Lead Times: Management repeatedly flagged 4–18 month approval timelines as the main gating factor for synergy realization, portfolio migration, and new product scale-up.

Capex & New Projects

• Integration Platform: Management described the quarter as the first full operating period of the merged entity, with “one integrated platform, one operating cadence and one team.”
• Companion Animal Entry in India: The company signed an exclusive distribution agreement with Boehringer Ingelheim for companion animal products in India, with commercial rollout starting in February.
• Albendazole Capacity Split: A new Albendazole line at Viyash has been validated after segregating human and animal production, with Europe approval received in 30 days and commercialization now ramping.
• Manufacturing Integration: The group is continuing to migrate externally sourced products in-house to improve plant utilization, supply reliability, and margin capture.
• Mangalore Divestment: The Mangalore analytical/testing site divestment was completed on December 31, with activities shifted in-house and expected annual savings of at least USD 1 mn.
• CDMO Readiness: Management said the current API asset base is already well suited for CDMO, especially for lifecycle management, complex chemistry, and oncology/cytotoxic projects.
• Build/Buy Agenda: The company continues to evaluate selective M&A and partnerships, especially to scale the companion animal business with India-based R&D and manufacturing capability.

Financial Performance

• Q3 Revenue: Consolidated revenue from operations was INR 858 cr, up 11% YoY.
• Q3 EBITDA: Adjusted EBITDA rose to INR 185 cr, up 64% YoY, with EBITDA margin at around 21%; management referenced +390 bps improvement, while the CFO cited 21.6% margin and +700 bps.
• Gross Margin: Gross margin improved to 54.5%, up 316 bps YoY per the CFO.
• Q3 PBT: PBT was INR 731 mn, after absorbing INR 413 mn of one-time merger expenses, versus INR 245 mn in Q3 FY25.
• Q3 PAT: PAT stood at INR 485 mn, after INR 413 mn merger expenses and INR 77 mn MAT credit reversal.
• 9M Revenue / EBITDA: For 9M FY26, revenue reached INR 2,500 cr, up 12% YoY, while adjusted EBITDA was INR 500+ cr, up 58% YoY, with margin of about 20.1%.
• 9M Profitability: 9M PBT rose to INR 2.2 bn from INR 498 mn, while PAT increased to INR 1.5 bn from INR 480 mn.

Operational Highlights

• Margin Drivers: Management characterized the margin expansion as structural, driven by mix improvement, footprint leverage, backward integration, and network optimization, rather than a one-off product or geography tailwind.
• Europe Animal Health: The company expanded its direct field force beyond Spain into Benelux and Sweden, added distributors in other markets, restarted companion animal development, and leveraged EU-GMP manufacturing from Spain and Turkey.
• Turkey and Brazil: Turkey delivered strong volume growth and is now being used as an EU-GMP export base into Europe, while Brazil also delivered a strong quarter and is being used as a springboard into Mexico and broader LATAM.
• India Animal Health: The India Animal Health field force was ramped to about 200 people last year, and management said that investment is now starting to show in growth, especially in farm animals.
• US Human Formulations Reset: The company is addressing post-COVID channel and competition pressure by transferring mature products to India manufacturing and focusing on differentiated, more complex launches.
• Backward Integration: Management said about 45% of high-volume US products are already backward integrated, with commercialization underway as a key lever for sustainable margin and competitiveness.
• API Base Stabilized: Management highlighted that this is the first year since 2022 in which the API business has crossed INR 400 cr, with a quarterly base of around INR 100 cr now considered stable.

Business & Strategy Updates

• Primary Growth Vectors: Management identified Companion Animals as the first long-term growth engine and API + CDMO as the second, with both expected to drive the next phase of scale.
• Companion Animal Opportunity: Management said companion animal generics penetration is only around 15%, versus 85%–90% in human health, creating large runway for future genericization and market expansion.
• CDMO Positioning: In CDMO, the company is prioritizing lifecycle management and alternate sourcing work for innovators, while gradually building capability for earlier-phase innovator work.
• Differentiation in CDMO: Management sees its competitive edge in EHS, quality credibility, speed, and complex chemistry capability, particularly in oncology and cytotoxic manufacturing.
• One-time Merger Charges: Management quantified merger-related exceptional costs at around INR 41 cr for stamp duty and advisors, plus about INR 7.7 cr from MAT credit reversal and tax-related items, for a total one-time impact of INR 48–49 cr.
• Deleveraging: Net debt to EBITDA has fallen to below 4x, and management identified lower interest cost from further deleveraging as an additional synergy lever.
• Integration Progress: All India legal and statutory merger actions are complete except for some customer and regulatory body formalities, which are expected to take a couple of months more.