SeQuent-Scientific-Stock-CMP

SeQuent Scientific is a pharmaceutical company. Its segments include Pharmaceuticals, Speciality Chemicals and Analytical Services. It focuses on products for livestock, poultry and companion animals. SeQuent Scientific Ltd undertakes its animal health business via Alivira Animal Health Limited, which is engaged in manufacturing veterinary APIs and formulations. Company portfolio consists of about 23 commercial products in animal health API and over 500 products across 12 dosage forms. Post demerger of the human API business, it has 7 manufacturing facilities across India, Spain,Turkey, Brazi and Germany.

Stock Details

Market Cap. (Cr.) 3330
Book Value (Rs) 35.68
Face Value (Rs) 2
Equity (Cr.) 49.67
52 Wk. high/low 145.45/52.00
BSE Code/ NSE Code 512529/SEQUENT
EPS 6.02
PE 42.06
ROCE (%) 12.29%
ROE (%) 9.60%
Debt Equity 0.04
Reserve (Cr.) 791.84
Industry Pharmaceuticals

 

Shareholding %

Jun-20 Mar-20 Dec-20
Promoters 54.87 56.15 62.12
FII 7.49 8.55 6.75
DII & Ins 4.13 0.21 0.42
MF 4.06 3.79 3.79
Others 33.51 31.3 32.89

SeQuent-Scientific-Price-ChartKey Investment Parameters:

  • Sequent Scientific is only USFDA approved Indian MNC generic animal player.
  • Currently Sequent Scientific Operating in Animal Health domain (API and formulation).
  • It has three business division API, Formulation and third divsion is CDMO which they have just started.
  • API: Rs 400 cr (34%) revenue Contribution from Top-10 products 88%.
  • API business: The company had a growth of 13.4% on a CC basis. The company will now be catering to the largest 3-4 veterinary players by offering one stop shop with API as well as CDMO capabilities.
  • Albendazole will be accounting for 25-30% of API revenue. Contribution from Top-10 customers 55%.
  • 26 Commercial APIs, 19 US filings/ approvals, 11 CEP filings, and more than 14 Pipeline.
  • Future Capex: Next Two year Capex is Rs. 90 crores (including maintenance capex) between India and Germany for expanding capacities at Vizag and also the injectable capacity in Germany
  • Turkey market: The Turkey business showed a growth of 11.1% on a constant currency basis. The company is in talks to buy out the business from its partner.
  • US business: The company is 18 months away from the first injectable commercialization in the US. The revenue would start flowing from the end of FY22.
  • The company generated Rs 40 crore of cash from operations in 1QFY21.
  • Other expenses were down due to reduction in traveling cost and certain in-house cost reduction.

Q1FY21 Performance:

Sequent Scientific 1QFY21 Result 1QFY21 4QFY20 1QFY20
Net revenues 310.3 300.6 278
 Total material costs 159.4 149.4 143.1
 Staff costs 44.1 41.7 39.7
Other expenses 55.7 58.4 56.6
EBITDA 51.1 51.1 38.6
Other income 1.5 1.8 1.3
Exchange Gain/(Loss) 0 -6.4 -0.1
Interest costs 7.6 9.3 8.9
Depreciation 13 13.1 12
Profit before tax 32 24.1 18.9
tax 7.4 5.9 3.5
Net Profit 24.6 18.2 15.4
minority interest 3.6 1.4 3.8
PAT 21 16.8 11.6

 

  • Global sales grew 10.1% on constant currency basis, 11.6% on reported basis.
  • API drives growth with increase of 13.4% on constant currency basis, +21.5% on reported basis.
  • Formulations business keeps pace with a constant currency growth of 8.5%
  • Cautious approach in Emerging markets lead to 43% decline, expect recovery in Q2.
  • Continue to expand margins through emphasis on high value products and focus on regulated markets.
  • Initiated Vizag expansion project for FY22 requirements, delay of 3 months.

Carlyle transaction update

  • As announced on May 8, 2020, CA Harbor Investments (The Carlyle Group entity) entered in Binding Agreement to acquire majority stake in SeQuent Scientific Limited.
  • Proposed transaction also triggered mandatory open offer by CA Harbor Investments and CAP V Mauritius Limited for the purchase of up to 26% equity shares of SeQuent from public.
  • The transaction was planned to close in Q2 FY21, subject to customary closing conditions and regulatory approvals

Outlook:

Sequent is now having a multi-year agreement with the global leader Zoetis to market & distribute their ruminant portfolio in India – commercialized from 1st July’20. The API business has gained significant traction over the last two years and provides a strong earnings base on which the formulations business growth will continue to be built. The API business has further steam left and can deliver similar growth rates until FY21. On the formulations front, the company is expecting growth, driven by approval of new registrations. The larger part of growth in the formulations segment will be driven by monetization of the injectables pipeline in the US and other regulated markets, which should begin FY22 onwards. The targeted injectable product is the largest in animal health space, representing US$ 300 million in global sales. Sequent will be a great multiplier over the next couple of years. We initiate buy rating on sequent Scientific with target price Rs. 185 with time frame 9-12 months.

DISCLOSURE IN PURSUANCE OF SECTION 19 OF SEBI (RA) REGULATION 2014

Elite Wealth Advisors Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Advisors Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as read more


For Daily Share Market Updates, Daily debt market review, Market Research Analysis reports, Weekly Techno-Funda Report, Fundamental Analysis Report, Monthly Recommended stock Picks, Equity Trading Tips, Upcoming IPO/NFO/Bonds/Ncd’s updates & other related information Subscribe our research plan