JM Financial has initiated coverage on Viyash Scientific (formerly Sequent Scientific) with a 'Buy' rating and a price target of Rs 338. The brokerage believes the company's recent structural transformation into a combined human and animal health platform will drive significant growth over the next few years.
What Happened
JM Financial has initiated coverage on Viyash Scientific, formerly known as Sequent Scientific, assigning the stock a 'Buy' rating. The brokerage has set a price target of Rs 338, which implies a potential upside of approximately 25.7% from recent levels. The report emphasizes the company's recent strategic shift, often referred to internally as "Sequent 3.0," following its merger with Viyash Life Sciences. This change has transformed the company from a focused animal health player into an integrated pharmaceutical platform that serves both human and animal health sectors.
The Growth Strategy
The brokerage highlights that this integration has drastically changed the company’s operational capacity. Manufacturing capabilities have expanded significantly, rising to 2,500 kL from 370 kL, while the research and development team has grown substantially to over 340 scientists. By creating an end-to-end value chain, the company aims to reduce reliance on external partners and streamline its operations. The management expects these synergies to help the company achieve cost benefits ranging from Rs 125 crore to Rs 150 crore by the financial year 2028.
Animal Health Opportunity
JM Financial identifies the animal health segment as a key driver of future growth. The brokerage projects a 17% compounded annual growth rate (CAGR) for animal health formulations and a 20% CAGR for active pharmaceutical ingredients (APIs) between FY26 and FY29. A major factor here is the expected wave of patent expiries in the companion animal market. The report notes that 17 drugs are slated to lose patent protection over the next four years, offering a much larger opportunity than the eight expiries seen in the previous four-year period. Viyash Scientific aims to leverage this pipeline to capture market share.
Financial And Valuation Context
Beyond operational changes, the report points to strong financial growth projections. JM Financial forecasts a revenue CAGR of 14%, an EBITDA CAGR of 20%, and an adjusted net profit CAGR of 38% for the FY26–FY29 period. Additionally, the brokerage observed that Viyash Scientific currently trades at a 30% discount compared to its domestic generic API and formulation peers. This valuation gap, despite what the report describes as a stronger market position and consistent customer retention, is presented as a reason for the brokerage's positive stance.
Risks And Investor Monitorables
While the outlook is positive, the company faces standard industry risks that investors should track. These include the complexity of integrating the two distinct business lines, as any operational friction could impact margins. Furthermore, as an export-oriented company with a global footprint, it remains exposed to foreign exchange fluctuations and raw material price volatility, which can put pressure on profit margins. Regulatory compliance is another area to monitor; while the company currently holds 10 USFDA-approved facilities with a clean record, maintaining these standards is critical for its global operations. Investors may want to watch for quarterly updates on integration synergies, revenue growth in the animal health segment, and any developments regarding the new product pipeline.