Viyash Scientific Q2 FY27 Earnings Call: Guides 20% Growth, Highest-Ever Revenue And Profit

Highest-Ever Top and Bottom Line, Fifth Straight Quarter of Double-Digit Growth

• Q2 FY 2026-2027 revenue of Rs.988 crore — up 16.2% YoY and 4.4% QoQ; management called it the highest-ever top line and bottom line and the fifth consecutive quarter of double-digit growth.
• Pre-ESOP EBITDA of Rs.208 crore — up 10.3% YoY from Rs.188 crore, but EBITDA margin compressed to 21.1% from 22.1% in Q2 FY 2025-2026.
• PAT of Rs.85 crore, up 16.1% YoY — adjusted PAT with normalised ESOP cost was Rs.110 crore; earnings before tax rose 15% to Rs.118 crore.
• H1 FY 2026-2027 revenue of Rs.1,934 crore (+17.8% YoY) — Pre-ESOP EBITDA of Rs.412 crore (+30% YoY) at a 21.3% margin (vs 19.3% in H1 FY 2025-2026); PAT up 50% to Rs.164 crore, adjusted PAT Rs.204 crore, operating cash flow Rs.182 crore.
• Gross margin of 53.7% in Q2 — down from 55.5% in Q2 FY 2025-2026; the CEO attributed the prior-year peak to an exclusive US formulation launch of about 5 million with 90%+ gross margin, and cited war-driven solvent and raw-material price increases (impact quoted as ~0.3-0.4% and also 0.23%) as a Q2 headwind, partly offset by price increases.
• Net debt fell to Rs.26 crore at 30 September 2026 — from Rs.166 crore at March 2026; net debt to LTM EBITDA is negligible vs 0.7x a year earlier, and the CFO said the company is close to a zero-debt position. ROCE excluding goodwill was 20% as of H1 FY 2026-2027.
• ESOP expense rose to Rs.67 crore in H1 FY 2026-2027 — from Rs.26 crore in H1 FY 2025-2026, primarily due to incremental ESOP grants pursuant to the scheme of amalgamation.

US Base Normalises Post One-Off Launch; API Set for Stronger H2

• US business declined YoY and QoQ in Q2 FY 2026-2027 — the CEO attributed this to a one-off exclusive product launch in Q2 FY26 that lifted US revenue from Rs.78 crore to Rs.126 crore with 90%+ gross margin on that product; US quarterly revenue has since stabilised at roughly Rs.110-115 crore with about 50% market share on the product from Q3 FY 2025-2026 onwards.
• US revenue was Rs.426 crore in FY 2025-2026 — the CEO said FY 2026-2027 US business of Rs.490 crore or Rs.480 crore would represent about 15% growth, and that the company would deliver close to those numbers. Analyst Gaurav Bhama (JM Financial) calculated about 32% YoY US growth from H1 FY 2026-2027 revenue of ~Rs.245 crore annualised.
• Double-digit US growth for FY 2026-2027 — the CEO clarified this does not mean exactly 10% and that constant-currency effects also apply; no major US launches are planned in FY 2026-2027, with one big exclusive launch expected in FY 2027-2028, though the company is currently the only filer and this is uncertain.
• API grew about 12% in Q2 FY 2026-2027 — CFO Ramakant described Q1 FY 2026-2027 as "a bit low," largely influenced by the geopolitical situation affecting customers; the CEO said customers' procurement of inventory they were holding is now happening, with strong visibility into H2 FY 2026-2027.
• API growth of 12%-13% to 13%-15% cited for FY 2026-2027 — described as mid-teens; the API business (animal and human combined) closed FY 2025-2026 at close to Rs.1,500 crore. H1 was hit by war-related price increases, volume pressure, and customers of mature products minimising inventory.
• Formulation-to-API ratio to stay roughly unchanged in FY 2026-2027 — currently tracking around 45:55 or 40:60; the CEO said the formulation mix could reach about 65:35 after 2-3 years. Gross margins for API and formulation have converged within about 2-3% over the last 6-8 months.

Fastest-Growing Business, Heavy Investment Weighing on Margins

• Animal health expected to grow 20%-plus in FY 2026-2027 — from a FY 2025-2026 base of close to Rs.400 crore; capacity for alvenol was more than doubled.
• Companion animal (including BFL) expected to reach about 30 million in FY 2026-2027 — up about 60%, and the fastest-growing business; gross margins are better but still at a low base ("we are at 10% level").
• Animal health investment rose from Rs.10-12 crore to Rs.40 crore — the CEO said this investment is why EBITDA margins are not growing; animal health R&D spend has tripled to a run rate of about Rs.10 crore per quarter, with at least Rs.40 crore annualised planned, and the R&D team has doubled in size.
• Farm animal business tracking 4-5 million dollars in FY 2026-2027 — products moved after the German business was shut; companion animal products such as Bio for Life generate about 10 million, growing 10-20% through geographic extension (period unspecified).
• Bioferlac (BFL), Italy acquisition closed 1 October 2026 — 100% of share capital acquired; BFL became a step-down wholly owned subsidiary, with results included from Q3 FY 2026-2027; management plans geo-extension of 10 products and expects cross-selling benefits over the next 2 to 3 years.
• Ambarnath companion animal facility expected ready by January-February FY 2026-2027 — worst case Q1 FY 2027-2028, which the CEO said is sufficient for launch requirements in FY 2028-2029; a Turkey partner facility for Europe is expected around December 2026-January 2027 (FY 2026-2027), with a 9-12 month approval cycle.
• Emerging markets grew 39-40% YoY in H1 FY 2026-2027 — the CEO said Brazil is mostly existing business volume, Turkey is growing well on new product launches with further expansion from FY 2027-2028 onwards, and Mexico is stable in FY 2026-2027. India underperformed expectations in Q2 FY 2026-2027, attributed to the rainy season.

Commercial-Heavy CDMO Book; Oncology Contribution Targeted by FY30

• CDMO revenue is 90% commercial as of Q2 FY 2026-2027 — the remainder tied to validations for new products; all new CDMO contracts are with specialty pharma companies and the innovator business consists of 100% mature commercial products.
• One new CDMO validation product may be signed in Q3 FY 2026-2027 — development cost of approximately 1.6-1.7 million with launch targeted for 2034; patent expiries for these specialty products mostly fall in 2034-35, and pharma companies target 8 to 10 years ahead for Para IV or technology-differentiation filings.
• Albendazole for the US commercialised in Q1 FY 2026-2027 — expected to contribute approximately 3-4 million in FY 2026-2027.
• Oncology pipeline to contribute materially by FY30 — the CEO said the pipeline should contribute "by 30" (spoken as "29 or 30, by 30"); the oncology human health business is expected to come in FY 2028-2029 or FY 2029-2030.
• US human formulation launch planned for FY 2027-2028 — the API patent has expired, one formulation patent has been circumvented, and there is "a small litigation" the CEO described as manageable; Viyash is the first filer with no current competitor, the only fully integrated player, and a day-one launch could secure 50-60% market share even after others enter. The affected US product market is about 90 million today (FY 2026-2027), stated without a currency.
• Oncology launches planned for Day 1 or Day 181 — mainly for the US market, with early work on partnerships with a few European countries; the API business covers NCE-1 Para IV products covering at least 60-70% of the portfolio, an approach to be extended to formulations. A new Hyderabad oncology finished-dose R&D facility can handle high-potent products up to OEB 5.

Genericisation Accelerating; ~$1.5bn Targeted Market Ex-US

• Europe's generic share of animal health is about 50% by volume — 50-60% by value; the CEO expects it to reach 70-80% within the next 3-4 years, as larger patent-expiry launches arrive around 2029-30 (FY 2029-2030 onward).
• Drivers of faster generic adoption in Europe — the CEO cited growing pet population, rising treatment costs, expansion into oncology, and limited insurance coverage; generics accelerated after COVID.
• $3+ billion market from patent expiry in calendar year 2029 — covering all geographies; the targeted market is close to $1.5 billion, excluding the US. Brand value of the three to four targeted products is about 3 billion today (FY 2026-2027), expected to reach 3.5 to 4 billion by FY30.
• Target of 10-15% market share after price erosion — of around 40% (up to 60% cited) on these products, with timing tied to FY30 patent expiry; the majority of companion animal blockbusters expire in 29 major countries, with launch expectation in FY30.
• Multiple companion animal products with patent expiries up to 2035 — targeted launches in Europe, Brazil, Turkey, Mexico, India and Southeast Asia, starting with Europe; local partnerships in Brazil and Turkey could accelerate launches by 9 to 12 months.
• One large Europe launch expected in FY 2027-2028 in API and CDMO — with launches continuing every year from FY 2028-2029 onward; after filing in Europe, the company plans to file in Australia and Canada, focusing on companion animal products.

20% FY27 Growth Above Initial Guidance; Sizable Acquisition Expected in FY28

• 20% overall growth expected in FY 2026-2027 — the CEO said this is above the mid-teens growth initially guided and that he is confident of it; FY 2026-2027 PAT is expected to grow more than 50%, with strong H2 performance.
• Targeting growth of 20% or more over the next 2 years (FY 2027-2028 and FY 2028-2029) — from a mix of organic and inorganic sources; the CEO cited an aspiration to reach a billion dollar business by 2032, factoring in "17, 18%" growth.
• Sizable acquisition expected in FY 2027-2028 — the CEO said the company will not acquire "just for sake of numbers"; FY 2027-2028 is expected to be the peak year for acquisitions, with focus on companion animal, specialty CDMO and specialty products, and in-licensing; organic initiatives have a 3 to 5 year gestation, so he is more comfortable with inorganic contribution after 3 years.
• Carlyle divestment: nothing seen for the next 12 to 15 months — responding to analyst Kushal Goenka (Mangal Keshav) citing Carlyle's 2020 investment with a finite 7-8 year life and a recent block of around 11%, the CEO said he cannot speak for Carlyle but Carlyle is not going to divest in the next 12 months; any future divestment would be systematic, through highly credible mutual funds, and he and Carlyle plan to talk openly with interested investors in Q3 FY 2026-2027.
• ESOP cost normalising from FY 2027-2028 — FY 2026-2027 ESOP cost is about Rs.148-149 crore (Rs.42 crore in Q2, ~Rs.40 crore expected in each of the next two quarters); Q1 FY 2027-2028 at about Rs.20 crore and full-year FY 2027-2028 at about Rs.32 crore, with a stable-state level of about Rs.25 crore going forward.
• Capex of about Rs.140-150 crore for FY 2026-2027 — ~Rs.60 crore spent so far with a further Rs.60-80 crore run rate; capex for the next 2-3 years described as around Rs.150 crore (also cited at Rs.150-170 crore) and may go down further. Solar capacity of 2.3-2.5 MW is expected in Q3 FY 2026-2027, with a further 4-5 MW targeted to close in FY 2026-2027.
• US a key priority market after 2-3 years — when US genericization, currently at "15-20%", is expected to accelerate after 3-4 years; Vietnam entity registration is complete with commercial sales expected early FY 2027-2028, and the company anticipates "3 to 5 million" (units not specified) over the next couple of years (FY 2027-2028 onward). Human health new product approvals have been delayed — the iron complex, previously expected in H1 FY 2026-2027, is now expected in H2 FY 2026-2027.