Thank you, moderator. A very good evening to all of you, and thank you for joining us today for SeQuent Scientific Limited's earnings conference call for the third quarter and nine months ended financial year 2026.

Today, we have with us Dr. Haribabu, Managing Director and Group CEO; Mr.

Rajaram, Executive Director and CEO Animal Health; and Mr. Ramakant, CFO of the company, to share the highlights of the business and financials of the quarter.

I hope you have gone through our results release and the quarterly investor presentation, which have been uploaded on our website as well as the stock exchange website. The transcript of this call will be available in a week's time on the company's website.

Please note that today's discussion may be forward-looking in nature and must be viewed in relation to risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out to the investor relations team.

I now hand over the call to Dr. Haribabu to make his opening remarks.

Thank you so much. Good morning and good afternoon, everyone.

Welcome to SeQuent Scientific investor call. Thank you for taking the time to join us today.

Today is an important milestone for all of us. This is the first time we are discussing quarterly results of the merged entity, SeQuent and Viyash together as one company.

More than the numbers, it's a reflection of what we have built over the last few quarters: one integrated platform, one operating cadence, and one team working towards the same outcomes. Let me structure my opening remarks around three broad themes, which I believe capture both what we have delivered and how we are thinking about the future.

The number one: combined growth, balance sheet, and this is now a well-scaled company with all the right ingredients. Starting with the quarter's performance, Q3 FY26 reflects steady progress on growth and a step change in profitability and balance sheet strength.

Revenue from operations for Q3 FY26 was ₹858 crores, grown up by 11% year-on-year. Adjusted EBITDA was ₹185 crores, grown by 64% year-over-year, with an EBITDA margin of 21.6%, an expansion of 390 basis points.

Net debt to EBITDA has reduced to less than 0.8%, 4x, a significant strengthening versus previous year. On a nine-month basis, the momentum is consistent.

Nine months FY26 revenue was ₹2,500 crores with 12% growth year-on-year, and adjusted EBITDA was ₹500+ crores with 50 58% growth year-on-year. Most important, our margins for nine months maintained at 20+% percentage.

Of course, we incurred one-time exceptional items largely related to merger execution this quarter, around ₹41 crores, which includes stamp duty as well as payment for advisors and consultants. In addition to ₹41 crores, and recently government announced a tax regime change.

We are trying to convert our old tax regime to new tax regime, which impacted around ₹7.7 crores. All together, it's one-time, it's gone up to ₹48-49 crores.

If we combine this one-time with the PAT what we have shown, it's a big growth quarter-on-quarter this quarter. What gives me confidence is that this performance is not narrow-based.

We are seeing broad participation across segments and geographies. We are truly working as a one team, that's most important for the group.

Equally important, the balance sheet is now a strategic asset. Over the past few quarters, we have consistently spoken about strengthening of financial base to create a headroom for sustained investments.

The business has moved beyond consolidation and course correction into a phase of accelerated growth. As we look at the merged platform today, that transformation is visible in the combined numbers and in the optionality the balance sheet gives us.

We will use a stronger balance sheet to unlock both organic investment as well as selective mergers and acquisitions. Coming to the number two, point two, now I'd like to take you through how we have improved our margins.

We can see quarter-on-quarter improvement margins last 8-9 quarters, how we have improved with key actions in last 12 to 18 months. The formulation animal health, Europe, as we have a strong foundation in Spain, manufacturing as well as front end.

Last follow eight 18 months, we have taken many steps to improve business in Europe. Few of those are expansion of markets with direct field force in Spain and few countries like Benelux, Sweden, and also we add a few distribution agreements for other countries.

Other few areas like develop we initiated development and promoting companion animal business, which is growing fast in Europe. Geo-expansion for all our products since our site is approved by Europe located in Spain, and also the site located in Turkey is approved by Europe, we are able to extend the products to Europe.

We started commercializing, it's reflecting the numbers. It's most important, established few more partnerships with other companies to distribute their products.

We distribute as we distribute few products even for innovators, we distribute few products, vaccines, for specialty companies. Coming to emerging markets, you know Turkey and Brazil are the key market for us.

Turkey turned around last couple of years, and you can see the large volume growth there this year. That shows our capability of expansion of Turkey.

Turkey also, as it's a GMP approved by Europe. We started filing and started shipping to Europe.

Brazil shown strong performance this quarter. It's continuously strong showing strong performance.

We are trying to expand from Brazil to Mexico and other related countries where we can do. With the Turkey and Brazil GMP facilities, now we are able to focus to expand markets like Mexico, Southeast Asia, and other few other focus markets where we can do business from there.

Coming to India, India, you know animal health formulation, we expanded field force last year up to 200, and which started resulting the numbers. We started growing, and this is a one of the key segment for to grow further for animal health in India, especially farm animals.

Then coming to the US, US formulation basically human health. Last two, three years post-COVID, as I explained earlier also, initially post-COVID, there's a lot of stock build up, there's a lot of competition coming from India.

That's initially we struggled little bit on competing the cost from US side. Last two years, we tried to change our strategy moving all mature products to India, and also started developing new products with little more complex where we can differentiate.

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 have done, commercialization is just started. These are few things show to show the sustainable growth on US business.

Coming to API, as API is our strongest core area for us, and we do continuous new to new products, and I think we are the one of the fastest company to do product development as well as launch. Most important, our efficiency levels in operations are very good compared to market.

Few things like network optimization, when we acquired few companies where there is a strategic direction, we tried to shut down few companies, and the continuous focus on the cost improvements with the focus team on the process as well as optimization at plant level. Since we have fully backward intermediate sites which are approved by FDA, we are able to integrate most of the products backward integration.

That's where it can show substantial improvement on the margins. Of course, markets also we try to move from low-end markets like India, Bangladesh, Pakistan, we started focusing more on expanding developed markets.

Other new area last year, you know initiated CDMO, it started working well. That's continuously to grow on that because all our assets, infrastructure, and resources are pretty well suitable for CDMO business, which can do with innovators.

We have a great experience build now, and that momentum is growing up now. These initiatives worked out very well for us and contributed both improvement on the gross margins and EBITDA margins.

Of course, these are the continuous activities to sustain the margins, both the gross margin as well as EBITDA. Then third, most important, after reaching reasonable base with sustainable growth, where do you want to grow, how do you want to grow.

I want to touch upon what we are doing next and how we intend to compound this momentum. Our strategy is focused on few clear growth sectors.

One of the sector, as I explained last call also, companion animal. This is one of the most attractive long-term opportunity for us, supported by increasing pet ownerships and also the genericization runway in animal health.

If you can read our presentation, the the few slides on companion animals, it it clearly shows this is the fastest growing area both in developed markets as well as developing markets. Most important today, if you see genericization, it's happened only 15%, whereas comparatively little more on farm animals and big on human health, 85-90%.

That's where we see the opportunity next couple of years. Since the volume and markets are growing, we are pretty confident the genericization will improve.

That's where we can it can bring opportunity for us. As we have already signed an exclusive distribution agreement with Boehringer Ingelheim, which is one of the innovator company.

I think it's a number three top company in the animal health. We signed exclusive agreement with them to distribute products in India.

We're going to start distribute sometime in February, and this is a one opportunity for expand to entire companion animal business in India. That's a one of the key focus area for us to expand companion animal animal business in India.

Of course, we are focusing other countries, but India is going to the one of the key markets for us. Other markets, opening markets and we are evaluating partnerships, which includes of course selective mergers and acquisitions companion animals.

We are exploring few things while also building infrastructure in India over time. This is most important and critical part for the companion animals.

We see there's a large opportunity to grow if you have capability to India, both R&D and manufacturing. That's where we see the differentiating factor for us.

Farm animals, we have very strong position in few countries like as I said, Spain and Turkey. We want to expand as much as possible from these countries to Europe, and we have clear plan.

We started filing last two years. It's started commercializing.

That's a continuous focus. We have large portfolio in form farm animal business today, and we're also looking at whatever are the gaps to fill the pipeline to compete more and grow that.

The third area, farm animals, there are few markets, important markets like Southeast Asia, Africa, to expand as there's a large opportunities. We're exploring those things.

This is a future, next five years target for that. Human health formulation, as I explained, we already started leveraging India manufacturing for mature products.

Our strategy is to maintain leverage India low-cost manufacturing for large volume or mature products, while keeping India sites to launch new products since we are going little more complex products and new small high-value products, and also keep open for to generate government business as much as possible. Coming to the last one, API and CDMO, it's a continuous focus.

There is a meaningful opportunity set both API API patent cliff and a growing CDMO market. You can go through our investor deck, how the CDMO business is going.

Of course, there's a competition also is growing, how we are going to differentiate based on the our quality of the assets, quality of the resources. Our focus is to pursue CDMO opportunities.

We are exploring both, while expanding internally, we're also looking at some M&A opportunities if we get. At the core all at the core of all of these actions in our one R&D platform and a scaled innovation engine.

We are a R&D-first organization to launch new products that is genuinely scaled and capable. Roughly we have 200+ scientists, including 20+ doctorates, and we have dedicated support team for CDMO and also CMO partners, and having specialized capability such as cytotoxic handling and process safety infrastructure.

This is consistent with what we have emphasized earlier as well, that our core strengths are anchored in R&D, manufacturing, and intellectual property. That this is what allow us to move the portfolio up to the value curve.

Across all of this, our actions and capital allocation approach remains clear: prioritize synergy capture and integration discipline over the next 12 months, maintain balance sheet strength, which is very important, of course, invest in growth opportunities that fit into our strategic direction and return thresholds. This is consistent with what we have said previously.

A stronger balance sheet provides the headroom to invest in portfolio expansion, especially companion animals, while continuing improving the returns. Now, I'll take you through the integration status where we are.

As all legal, procedural things we completed now, except working with the clients to work with the regulatory, external regulatory bodies. It that may take a couple of months, but other than that, all India legal statutory actions completed.

We are able to integrate fully now. Even though we are not done official, as I explained the last call, also last 12 months when we announced, we started working as one team, like few things, R&D already.

R&D fully integrated as one R&D, both animal health and human health, of course. Couple of new products already developed in animal health.

We validated last 12 months few four new products for animal health and validated. Couple of projects cost improvements have taken, and it's working well.

It's we filed regulatory. Some of those things started getting approval next few months, but as I explained last last call, also it takes 12 to 18 months.

We are in fully on track on that. Manufacturing, again, we relooked at net network optimization, how can we utilize efficiently complete infrastructure.

Whatever products we're trying to we're getting from outside companies, we moved to internal. That's basically to improve the capacity utilization, as well as also to provide more comfort to the clients actually for the supply reliability.

Six of the intermediates already we completed, and one of the most important area, we completed one of the new production line to accommodate this is basically albendazole product. Albendazole goes for human health as well as animal health.

Everything till today we were manufacturing at one site, we are trying to segregate into two two sites. We segregated the human health and build new site at Viyash.

It's validated, and we filed regulatory. Fortunately, one of the approval, Europe, which is very important for the product, we received approval in 30 days.

That shows our strength of regulatory. Other approvals we are waiting, but most of the market goes from Europe.

Now, we are working with the customers how can we commercialize quickly on that. Of course, few markets where we are able to do immediately, we started doing.

Incidentally, we are seeing the huge volume growth of for the albendazole. You can see the good growth this year.

One of the things I would like to highlight, guys, you must have seen SeQuent API business last maybe 5, 6 years. I think this is the first year after 2022 we are crossing ₹400 crores.

It's a great teamwork, both Viyash and SeQuent contributed. I think it's so quick.

Doing this ₹100 crore crores per quarter, we were struggling last 2, 3 years. Now, it's streamlined, established at ₹100 crores minimum base, and you can see FY27 first year after long time it's going to grow double-digit.

With the good profitability with all our actions. Sales, as I said, it's a cross-selling both.

We started interacting last 12 months. Few things are getting materialized.

The products, you know the regulatory scenario takes its own time, 18 months, 24 months, but we see the positive momentum on that. Coming to the corporate functions, all shared service, whatever, we had fully integrated, we have a clear plan who is going to do what, which function is going to move here or there.

All are established, it's working as one team, we see that. Also one of the things we mentioned, one of the site we're going to divest, that's at Mangalore.

We completed the transaction. That's a basically testing site for internal as well as external clients.

We are able to close December 31st, moved all activities internal. That's where we are going to save at least a million dollar in next year.

That's a one of the strategic initiative. With this, to close, Q3 FY26 is a milestone quarter, not only because it's the first reported quarter of the merged entity, but because it demonstrates that the last several quarters of execution are translating into sustained performance, steady growth, structurally higher margins, and much stronger balance sheet.

We have our strategy and actions well-defined, and with a strong foundation we have built, we have no doubts we'll achieve great outcomes for the stakeholders. With that, now I will now hand over to Ramakant, our CFO CFO, to take you through the detailed financials.

After that, which we'll be happy to open the floor for any questions and answers. Thank you.

I hand it over to Ramakant.

Thank you, Doctor. Good evening, everyone, and thanks for joining us.

Pleasure to share insights on our strong Q3 and nine-month FY26 financial performance. Starting with Q3 FY26—

I'm changing the mic. I guess it's better now?

I'll start from the beginning. Good evening, everyone, and thanks for joining us.

Pleasure to share insights on our strong Q3 and nine-month FY26 financial performance. Starting with Q3 FY26 financial highlights: total revenue reached ₹8.5 billion, up 10.9% year-on-year.

Formulations revenue grew 20% to ₹4.8 billion, while API revenue rose 2.9% to ₹3.6 billion. Gross margins improved 316 basis points to 54.5% from 51.3%.

Adjusted EBITDA surged 69 64.4% to ₹1.8 billion, and margins expanded 700 basis points to 21.6%. Profit before tax for the quarter is at ₹731 million, and this is after accounting for one-time merger-related expenses of ₹413 million.

This shows a manifold improvement compared to ₹245 million in Q3 FY25. Profit after tax for the quarter of ₹485 million, this is again after accounting for one-time merger expenses of ₹413 million and a one-time charge on account of MAT credit reversal of ₹77 million.

Profit after tax in Q3 FY25 was ₹420 million, which actually included a tax benefit accounted for certain accumulated losses in erstwhile VR subsidiaries. Consistent performance in the last few quarters demonstrates strength and stability of our revenues as well as earnings.

Now, I move on to the nine-month FY26 performance: total revenue climbed 11.9% to ₹25 billion. Formulations revenue expanded 14.5% to ₹13.6 billion, and API revenue grew 9.6% to ₹11 billion.

Gross margins rose 350 basis points to 54% from 50.5% in the previous year. Adjusted EBITDA jumped 58% to ₹5 billion, margins up 580 basis points to 20.1%.

Profit before tax clocked 3.5 times increase from ₹498 million to ₹2.2 billion on account of strong operational performance. Profit after tax more than tripled to ₹1.5 billion from ₹480 million in the previous year's same period.

Our focus on product and service mix, expanding geographically, and enhancing operational efficiency has driven higher margins and a stronger financial performance. The merged entity financial position provides solid stability with low debt levels and improved efficiency in leveraging assets for stronger returns.

Looking ahead, we continue to prioritize realizing merger synergies, maintaining steady profitability, further reducing debt, and maximizing cash flow generation. With this, I end my opening remarks.

Thank you for your attention. I now request the moderator to open the forum for Q&A session.

Hi. Sir, congratulations for a good set of results.

Now that this is a merged result, have the synergies been fully captured or is there much more to come? Is this EBITDA margin of 20% sustainable?

Secondly, this quarter there seems to be some exceptional items. Are these one-time or could you please explain a bit more on these?

Thirdly, the ESOP cost, are these going to continue? How should we look at it for the future?

Okay.

Thanks for your questions, I think, Krisha. First one is this 20% margins are going to sustain.

Yes, it's going to 100% sustain because now you see we have four segments. Even if there is a small issue in one segment, other segment is able to absorb those things.

We are very confident to sustain these things. Earlier, we indicated of course FY27 we are going to achieve close to 20%, but because of our initiatives last 3, 4 quarters, we're able to achieve now, and we are very confident to maintain that 20%.

Also you mentioned that synergies. Synergies are not factored much at this level.

See as I said, synergies mostly takes 18-24 months as operational synergies which requires regulatory approvals. Few things like when I say we shut down one analytical site, which is going to give synergies around ₹7 crores.

That's going to reflect slightly this quarter, but mostly from next quarter onwards. Most of the synergies are not at all factored, but it's going to come in 27.

Then the one-time cost, there are three one-time costs. One is this merger-related asset transfer stamp duty.

That's a purely one-time, there is no change on that. So, ₹29 crores.

Then the second one is advisors, a success fee, consultant fees, purely merger-related, like ₹10-11 crores. That's a purely one-time.

The third thing is the tax returns of ₹7.7 crores MAT credit, whatever we return. Recently government has issued note that during the budget, they come up with something.

That's also purely one-time, but we may have positive next quarter if they change the government policy. Next quarter, it may end up positive on that.

Purely all these are one-time, there's no chance of coming to that. Coming to ESOP, there are two ESOPs things.

One existing ESOPs, you must have seen come down this quarter. It's going to continue next few quarters.

Yesterday, board approved new ESOP scheme for old Viyash scheme convert into new scheme. That we are working out the numbers, but that's going to continue next 1, 2 years on that.

Other than these things, we don't see any one-time expenses. Hope I clarified all three questions what you asked.

Yes, sir. Thanks a lot for your detailed answer.

Thank you.

Hi. Hope I'm audible.

Congratulations on the great set of numbers. I have a couple of questions.

Going ahead, what are the shifts that the company will do to keep the growth going? Could you please share a bit on the future priorities?

Thank you, Ishika. Thank you.

Future, of course, I explained few segments where we are going to focus. Companion animal is the big segment to grow.

Other things, CDMO and also integrated play for merged entity. These are the things we're looking for both organic as well as inorganic growth.

Since our balance sheet is very strong now, we can leverage the balance sheet. We're working on a few areas to grow on that.

Understood. That was really helpful.

Also, you had indicated CDMO opportunities. Is it for human or animal health as well, and when can we see these materializing?

It's a both. In fact, animal health 80% we do business with innovators.

It's a kind of CDMO even though we didn't define that, but we are accelerating that growth in animal health based on last 6, 8 months our performance with them. Now, we are getting new enquiries, new RFQs for the new products, and we see the momentum growing animal health future.

That's where we see the good opportunity. That's one of the reason I also mentioned this year after 4, 5 years animal health API is going to grow.

CDMO focus is that. Second, human health, we focused last 1 year and we've done reasonably well, of course, it's a material, and it's going to continue.

Both animal health as well as human API is going to continue CDMO, and we can see it's a reasonable number even today also if I put all together, but it's going to grow maybe after 2, 3 years big number.

Understood. Just one last one.

You had given a guidance of ₹4,000 crore and 20% EBITDA in 2028. Would you still be achieving these targets?

If you see our current run rate, you know the answer. When we say ₹185 crores this quarter, ₹187 crores last quarter, and also the top line is going to close to ₹900, ₹860 crores odd.

Even if you take 15% growth, we are pretty comfortable to reach that level.

In FY27.

Not even 2028, 27, that one, whatever. Of course, this ESOP and all those things, but we are comfortable to achieve that.

We are very confident to maintain the 20+ EBITDA levels now.

Understood. Thank you so much.

I'll just rejoin the queue for the next question.

Hello, am I audible, sir?

Yes, yes.

Good evening and congratulations for a good set of numbers. First and foremost, sir, a very good presentation.

It was really quite in detail to understand what has been achieved and what is the focus going ahead. Second, sir, I would like to understand this quarter the growth on the API side has been low single-digit.

Is there anything to read over here or is it just a one-off quarter kind of thing?

Now, thank you for your comments and question. API, one of the reason is a little bit timing issue.

Last quarter, we had a few CDMO contracts. That's pushed to next quarter.

This quarter, it was less, but it's a simple timing issue. We are growing constantly on that.

We don't see anything. It's only quarter small timing issue.

Okay.

Right, sir. Right.

Secondly, sir, on the CDMO, like the previous participant also said, is it possible to give a number as to what percent it would be of the total revenue?

Maybe I can give a rough math. This year, whatever we initiated, because there's a three segments in CDMO.

One is animal health what we are doing out of ₹400 crores, 80% goes to innovator. We can consider CDMO or innovator business.

Purely what we initiated Viyash CDMO last 12 months, this year we'll end up doing ₹70 to 90 crores on CDMO. If there is a CDMO, CMO for big players, this year it's going to grow ₹70-90 crores.

Few projects whatever we supplied validation with innovators, it's going to start commercialize next year. These are the lifecycle management products with innovators, few products we are working.

Those two products are going to start commercialization next year. This year, whatever we supplied, these are the launches is coming to mostly 2030 onwards.

That's today ₹70-90 crores, and we see growing continuously from next year onwards.

Okay. Should we expect this part of the business, as in the CDMO side, to be growing much more faster than the overall growth in the business?

That will go much faster after three years, I can say. These things will take 3, 4 years.

One is once you supply validation, innovator generally, whatever product, even lifecycle management, it takes 3 to 4 years to get it commercialized. One of the product we initiated 1.5 year back, the first commercial supply is going to start after 2.5, 3 years.

Full commercialization will come from fourth year. Since we initiated 12 months, but if we are lucky, we can get something next 1, 2 years substantial, but most of the growth will come from maybe after 2, 3 years.

Till that time,

next two years our existing business growth will continue. Most important, here you should note animal health APIs are going to grow very fast next year.

Whatever we set up infrastructure, what we did, process improvements, and improved credibility to the current clients, it's going to improve drastically. You can see the very good growth next year.

Sure, sir. Sure.

Thank you, sir, and I will come back in the queue if I have more questions.

Sure. Thank you.

Thank you for the opportunity and good to see sustaining healthy gross margins, Dr. Haribabu.

That's a very welcome sign. I've got few questions.

In an increasingly crowded CDMO market, what are the 2-3 capabilities you believe are genuinely hard to replicate by others and which CDMO segments or technologies you have explicitly chosen not to pursue?

CDMO, as explained last call also, there are few areas. One is few companies to do for innovators for the new products, NCE products.

That's where they start developing at Phase 1 or Phase 3 level. Once the innovator product approved, they continue commercialization at this company.

Second thing is a lot of innovator companies, if you see even next three years, many blockbuster products are coming out of patents from innovators. Last 3, 4 years, innovators started looking at alternate low-cost area to improve their lifecycle management.

That's a second one. That's where we are focusing, we are doing good both animal health and also human health whatever we started targeting lifecycle management.

Because this requires two areas very strong: one is EHS sustainability, and the second is quality credibility. We believe since we focus from beginning of the establishment always top focus on EHS and quality, and also most important, it's tested by various innovators.

We are proven we are much capable to do business with them. All ethical things, EHS, sustainability, all, it's pretty established with innovators.

That's where we see. Most important, we are very efficient and speed is very fast compared to whoever is actually large CDMO players.

One of the innovator company we are working with additional site recently for albendazole, normally they take 2, 3 years even to initiate and do that, and when they see our new site and capability, EHS status, they want to do more than what we anticipated. We thought it takes 18-24 months, they're going to close in 12 months.

The lifecycle management, we see the good growth opportunity for us next 2, 3 years. That's where we are building new products next 2, 3 years.

That's what I said, building separate CDMO infrastructure and also people. The third thing is where companies are looking at, there are large number of specialty companies, especially in Europe, and also there's big generic companies, they're able to develop new products, complex products, but they're not able to scale up internally.

That's where they're looking at the quality manufacturers which sustain the compliance, and we see the large number of opportunities. You see last 12-18 months, whatever we generated ₹70-80 crores revenue, that's come from many complex new products, especially onco facility.

Onco very few quality facilities are available in India. We are the first choice, it looks like.

Many products are coming, every month it comes out. Most of the products are first-to-file where Day 1 launch happens, either they get exclusivity, even if they get 10-20% exclusivity, that's good enough for us.

Most important is locking with the customer. When they work with us tech transfer and contract manufacturing with some optimization, they locked with us, they cannot go with others.

We see these three opportunities, second and third, we are very active, and with our speed, quality, EHS, we are able to differentiate. First one where the new products like Laurus or Divi's they do NCE products, we are gearing up for future.

It's all differentiation is basically speed, quality, EHS. Those are the differentiating factors, and for my experience, hardly we can see very few companies capable to do that.

Of course, everybody claims CDMO, CMO, even solvent recovery, guys, but we see very few companies are able to do that.

Absolutely. Thank you for detailing all of that.

Just one clarification. Today we're not ignoring NCE or all patent-protected CDMO, but we'll go after that space maybe more aggressively in another 2-3 years because at the moment, the lifecycle management, our relationship with the innovators is giving us a lot to chew already.

Is that correct?

Yes, yes. We are building what is required, what is to differentiate now.

We're starting this year. This year, if you ask me to focus FY27, the top focus was companion animals.

There's entire world is looking at. We surprised few data points when I started looking at US, you will surprise there are 9.4 crores of dogs and 9.2 crores cats.

When I visited Italy last month, when I was looking at the data, they say when I was talking how it can possible dogs and cats, it's a completely different world. You can see Italy cats at least 1:1 of the people.

That kind of market we are talking, and most important, that market is started genericizing. Because once a growth starts, volume grows up, everybody looks for cost-efficient thing.

That's a great opportunity we see. These are the two top focus areas for us.

Yes, yes. The generic penetration in animal companion animal, that is, is only about 15-16% today versus human Yeah, yeah, so that gives us a lot of

Yeah,

gives us a lot of headroom to grow the animal companion animal, the cats and dogs.

That's where we are going to invest both R&D and also one of the manufacturing infrastructure, either acquisition or organic in India, and expanding front end with products where the markets are strong. Like Europe, there are 4, 5 markets like Italy, Germany, France, and UK, other than Spain.

Spain, we have very strong presence. These are the markets we are exploring how fast we can penetrate, either through organic or looking for some acquisitions.

India, it's a fast-growing market since middle class is moving to above middle class, everybody started liking pet. This also the highest focus area through BI.

This is where we had opportunity to build very strong presence in India. Companion animals, if you ask me today API, we are the largest portfolio company in companion animal API.

We have almost 60% of the total portfolio, and we started developing products even the patent expiry for 2032, '34 thing. That's exactly similar to how we used to do for human.

These are the things we see we can grow long term reasonably good. Thank you.

Thank you for that question.

Yes, just one last if I can squeeze. On the distribution side, we are very active on the distribution not only in India, but even outside India, right?

We have got active presence in Brazil and other economies, even in Europe. That should also help us scale up faster in companion animal, right?

Yes, we have very strong distribution chain in few countries like Spain, we are very strong. We distribute many other companies innovators, even for others also.

Benelux, we have our own distribution channel now. Turkey, we have very strong field force.

Brazil, we started building few other countries thing. Italy, we started building field force for companion animals.

Also more than companion animals, since we have production animals approved by Europe, we are extending those distribution chains also for other countries. We have experience of distributing even innovator products like India, we do distribute with Zoetis long term, now with BI, and Spain we do.

We have a very strong distribution chain on that. That can

accelerate. Thank you.

Very helpful. Sure,

sure. Thank you, Dr.

Haribabu. Thank you.

Hi. Thanks for taking my question.

Correct me if I'm wrong, but before the merger, the animal health business did not have SeQuent, which was did not have any exposure on the formulation side to North America. Now post this merger, is there a case for SeQuent SeQuent's business, the animal health business, growing its formulation business in North America since that's a big market?

I guess thanks for the question. We are exploring, we are going step-by-step.

First mid-term where we want to grow like emerging markets and Europe, since we have established distribution, we have full understanding on the products. We want to target first phase to grow these markets.

The next phase is definitely, yes, US also we're exploring. We're exploring two options, whether organic or inorganic.

US, one important thing required still, supply chain, okay, maturing supply chain, it may take some time. We are studying the supply chain how it works compared to human health, and Europe markets we know very well supply chain animal health.

US is still we are studying. The two things are required: supply chain strength and also the basket of products, which takes some time to develop or approve.

Parallelly we are looking at alternate too. Is there any M&A available for that?

We are open that, but the first top priority is how fast we can go for emerging markets, which includes India and Europe for these things. Yes, we are going to explore, and we'll be there.

Only timing still we're not yet decided.

Great. Thank you so much.

Hi, Haribabu and Rajaram, thank you very much for an excellent number and opportunity to be with our company. Hello?

Please go ahead.

Yeah. Sir, since I understand that our say CDMO lever will start playing out bigger way after 2-3 years, but meanwhile we are expanding the way geographically as well as product basket, either our own or distribution, as well as API.

Now that will also require good amount of investment. How do we really want to play growth having sustaining the margin and is there other room for improving some margin, say ₹4,000 crore is taken FY27, beyond that, how do we think about it and what is our aspiration?

Thank you. It's a detailed question.

Let me try whatever best. Our actions last 2, 3 years.

First action is how to build a sustainable company. The balance sheet should be strong,

whatever our actions.

Few years we reached to that, we never focused on the only top-line. We could have grown top-line much more than that,

but

we never thought of that. Most important is right balance sheet, right margins, sustainables, that way you can take it to next level.

After 2, 3 years, both companies, and most important, last 12 months understanding both companies each other, now you reach to the scale at sustainable level. You can see the jump from ₹140 odd crores to ₹180 crores base, EBITDA base.

Now, we are focusing on 3 2, 3 areas. You asked the question actually how we are going to support this expansions of that.

You see that our debt has come down drastically.

Of course, growing at a better speed and whatever we are.

We are going to generate good free cash flow next year. Looking at our current debt, ₹200 odd crores is nothing actually for this company.

Then even if you look at ₹800 crores EBITDA, there's a lot of free cash generates. We don't need much capex other for existing business, whatever API.

That can take care of some extent. Also, there will be something comes up warrants.

It's going to come. I put a money 25%, remaining I'm going to do 12 months.

All these is going to come. It's a reasonable size for to do entire organic and also some acquisitions.

Most important, when you reach to ₹4,000 crores, ₹800 crores odd crores EBITDA, you can leverage actually debt also to do is there any good acquisition. All things, leverage debt some extent if required, or we can do something share swap, whatever it is, but it's all purely based on the long-term sustainable.

We don't do just to show top-line numbers. We are very comfortable with this current debt position, free cash, whatever we are looking cash generation next 12-18 months.

We can do a lot. That's what we are.

Right. We don't

We don't want to do everything overnight. That's the thing.

It's not the case. No,

no, I do understand. What are the aspiration for improving further lever?

Some of the points you said that looks like that will also help us in going beyond 20% EBITDA margin.

First my aspiration is we want to become one of the leading animal health company. You can understand if I want to be top 10 animal generic, I will not compare innovator, actually that's help is the thing.

A reasonable size. Of course, as aspiration, I feel, practically, guys, 5 years 15-20% CAGR is one thing.

When you see the spike, it can go 1 year actually. You have seen our EBITDA growth 50%, 60% this quarter and 9 months.

We cannot expect 50-60% EBITDA growth every year like that. We can see that spikes while doing acquisition when there is an opportunity, but we are confident and we are targeting minimum of 15-20% EBITDA growth.

That's what we look at.

Great. Wish you all the best, sir.

Thank you.

Thank you. Thank you, Bharat.

Thank you.

Thank you so much for the opportunity. I had a couple of questions.

One is now that the merger is completed, what kind of KPIs internally also would you be tracking to see whether the synergies that you are expecting from this merger, whether you are able to achieve that? What kind of capex would you want to commit for this merged entity?

Few things we defined integration activities, of course. R&D synergies, it may not reflect directly, but there's a lot of improvement on the business expansion and improvement.

That quantification will take a couple of years on that. When it comes to our network synergies, that's a one of the key thing we also explained, ₹50-60 crores, it takes 12-18 months.

It's tracking very well. That ₹50-60 crores, 18 months start from maybe now 3 months over, another 15 months, we are well track on that ₹50-60 crores synergies and network operations.

Which includes, of course, corporate functions, restructure. Our intention is not to reduce people, our intention is more improve the business.

Third thing is, since debt is going to go down drastically, in addition to ₹50-60 crores, we can see the improvement on interest payment. Already we started repaying little bit high-debt loans, but definitely you can see good improvement on the interest burden.

The other thing is, since we're very strong R&D, this differentiating animal health new products, that's going to is a great improvement next 3, 4 years. Coming to the straight point, ₹50-60 odd crores, 12 15-18 months, it's going to happen.

That's first phase. Second phase is going to be the long-term synergies that can show the good growth in the both top-line and bottom-line on that.

Understood. Then if you look at a 3 to 5 years kind of a timeline, what kind of target revenue mix you will be seeing between say animal health and API CDMO?

How would you want your business to look like?

Today, we see our mix close to 55% formulation and 45 around API. I'm just telling you, guys, rough figures.

Going forward, we see will maintain same ratio because we have intention, aspiration to grow a lot in the animal health formulation business, formulation also complex thing. We see going forward, including CDMO, it will maintain the same ratio.

API, regular APIs after reaching to certain level, growth from there, it's not easy like formulation, but since that is going to compensate by CDMO, we can expect the similar growth from both areas.

Got it. Just a final question, just a small clarification.

Last year around September, there was this news item that especially in India that there was some kind of ban on antibiotics and antiprotozoals for treatment of livestock. I just want to understand, would that have any impact on us?

Raja, can you answer this? Yeah.

It's not a general ban across all antibiotics and protocols. There were one or two products very specifically which were identified by the government, and those are products which almost everybody had, but for us, it was a very small amount and it doesn't sort of impact us.

I think the other evolving thing for us is that the antibiotics more and more internationally are being delivered in the injectable format and that is one thing which we have because for veterinary prescriptions, injectables are required, and we have fast-growing injectable operation in most of the animal health product which we make out of Turkey. To that extent, I think we are well covered on that.

Having said that, there are continuously new products which are getting launched and those are they're getting genericized and we are sort of launching them as well.

Sure. Thank you so much.

Thank you, guys. Thank you everyone supporting us for this merger.

We'll do whatever best, but we are very transparent and we are very open. Whoever want to understand better, you can reach out to the people mentioned in the investor presentation.

If anybody want to have a different discussions with me also, I'm always available. We run very transparent, very compliant way.

Thank you so much for your support. Thank you.