Viyash Scientific Ltd. - Sustains high margins, focus on new growth avenues - Company Update 

Viyash’s Q4FY26 was a beat to our estimates, driven by surge in formulation business, especially in Europe, India and USA. API witnessed a slowdown in growth to 5% yoy. However, the Q4FY26 results proved the sustenance of high margins for the merged entity, driven by synergies, improved profitability in emerging markets and scale up of complex API. Going ahead, Viyash aims to increase R&D spending & sales network for the companion animal portfolio, increase capacities in emerging markets and capitalize on genericization of animal health. Viyash also aims to capitalize on the vast CDMO opportunities with an aim to likely double its business in three years. All these factors together converge into a robust 17%/ 21%/ 56% CAGR in Revenue/ EBITDA/ PAT over FY26-FY28E. We value Viyash at 15x FY28E EV/EBITDA to arrive at a TP of Rs 355/sh and maintain BUY rating.

Beat on revenue growth led by formulations:

Viyash reported a strong 19% yoy growth in consol. revenues at Rs 9.2bn (beat to our estimates), driven by surge in the formulation business (+28% yoy), especially in the Europe, India and USA. API witnessed a slowdown in growth to 5% yoy. For FY26, Viyash reported 14% yoy growth in revenues at Rs 34.2bn. For FY26, formulation revenues grew by 18% yoy and API revenues grew by 8% yoy.

Sustains guided margins led by merger benefits:

Viyash reported a 590bps jump in EBITDA margins at 21.7% (excludes ESOP cost), outperforming its guidance largely due to synergies of the merger, shift to complex API and Intermediates from commodity products and improved profitability in emerging markets. EBITDA surged by 64% yoy to Rs 2bn. Consol. Adj. PAT grew by 21% yoy to Rs 574mn. For FY26, EBITDA grew by 57% yoy to Rs 6.9bn, resulting in margins of 20.2%; +560bps. Adj PAT grew by 67% yoy to Rs 2.6bn.

More synergies to unlock; focus shift on focused growth:

The company continues to phase out low-margin products while prioritizing higher-value new launches. Further, R&D pipeline remains robust, with 19+ products in development, reinforcing future growth visibility. Product development momentum continued with the launch of 1 FDF in the USA and 5 APIs alongside successful clearance of 8 regulatory and 38 customer audits. Viyash has now proven the sustainability of margins and are likely to ramp up synergies (R&D, procurement, cross selling) to the tune of Rs 1.3bn annually.  A very high pedigree of experienced and focused management team further drives our conviction on the evolution of this business. Going ahead, Viyash aims to increase R&D spending & sales network (Europe) for the companion animal portfolio, increase capacities in emerging markets, shift towards complex API & Intermediates from commodity products and capitalize on genericization of animal health. Viyash also aims to double its CDMO business in  three years by leveraging its rich client base of innovators. All these factors together converge into a robust 17%/ 21%/ 56% CAGR in Revenue/ EBITDA/ PAT over FY26-FY28E.

Valuation, view and key risks:

We value Viyash at 15x FY28E EV/EBITDA to arrive at a TP of Rs 355/sh and maintain BUY rating. We have upward revised our earnings by 27%/ 22% for FY27E/ FY28E respectively to factor in the merger led synergies in margins and high interest income (strong cash accumulation in balance sheet). At CMP of Rs 246/sh, the stock trades at a very attractive valuation of 12.4x/ 10x FY27E/ FY28E. Key Risks: Geographic and product-related challenges, delays in synergy realization, and high competition in CDMO.

Company website: https://viyash.com/

*CMP is as per report published date

Click to download the full Viyash Scientific Ltd. Q4FY26 Company Update

Analyst:

• Sahil Sanghvi - Research Analyst, Institutional Equities (NISM-201900004744)
• Uvais Khatri - Research Associate, Institutional Equities (NISM-202300049054)

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FAQs on Viyash Scientific Ltd. Q4FY26 Company Update

1. What drove Viyash Scientific’s Q4FY26 performance?

Strong growth in formulations across Europe, India and the US along with merger-led synergies and improved product mix supported earnings growth.

2. What are the key growth drivers for Viyash Scientific?

Key growth drivers include CDMO expansion, complex API scale-up, companion animal healthcare and increasing penetration in regulated markets.

3. How are margins improving for Viyash Scientific?

Margins improved due to operational synergies, higher profitability in emerging markets and transition toward complex and high-value products.

4. What is the management outlook for the company?

Management remains optimistic on long-term growth supported by R&D investments, capacity expansion and rising opportunities in animal health generics.

5. What are the major risks for Viyash Scientific?

Key risks include competitive pressure in CDMO, delays in synergy realization and regulatory or geographic market challenges.

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