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#SequentScientific FY 2022 Annual Report Highlights

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1. Company overview:
Sequent is the largest animal health company in India and among the 20th largest in the world.

They manufacture and sell APIs and formulations which are used in the animal pharma industry

2. Revenue Split: The company derived 69% of revenues from the formulations segment and 31% from the API segment. Europe was the largest geography followed by LATAM and Turkey.

65% of API revenues came from regulated markets.

3. Segment Performance:
API - Revenues from the API segment were ₹430 Cr for FY22. In Q4 FY22, the company achieved revenues of ₹140 Cr which is the highest ever quarterly performance for the API segment.

They also commercialized 1 new API during the year and submitted a new US VMF filing, taking the total of commercialized APIs up to 31

Formulation - The formulation business achieved revenues of ₹975 Cr in FY22. 2/3rd of the formulation revenue came from regulated markets.

The formulations business in India crossed landmark revenue of ₹100 Cr during the year. Tulathromycin, a major product launched in FY21, performed ahead of expectation in FY22

4. Management Change: During the year, Manish Gupta resigned as MD and Rajaram Narayanan (previously MD of Sanofi India) was appointed as the new Managing Director.

Tushar Mistry also resigned as the CFO and PV Raghvendra Rao (previously Finance Head of various divisions at Dr. Reddy’s) was appointed as his replacement

5. Capex update - During the year, they commissioned the 7th clean room at Vizag. This has increased their capacity by 20%. The upgradation of the formulation facility in Germany has also resumed post relaxation of pandemic restrictions.

6. Future R&D pipeline

7. Future Growth Drivers:
During the year, they consolidated their Brazil business and also made an acquisition of Nourrie, which came with a portfolio of 23 commercialized products, and a near-term pipeline of 17 products for pet and swine segments.

Brazil has become their 3rd largest market behind Spain and Turkey.
They are looking to deepen their relationship with the Big 4 Animal Health players. They recently signed a long-term master supply arrangement with a global player, expected to drive growth in coming years

They have also signed a CDMO deal with 2 Top 10 animal health companies. The revenues from this deal will begin in the second half of FY23.

Entry into the US market for formulations is also expected to drive growth in the future.

8. Financials
Revenue - ₹1412.8 Cr (3.76% growth YOY)
EBITDA Margin - 7.7% (15.9% in FY21)
CFO - ₹57.4 Cr (₹158.5 Cr in FY21)
ROCE - 9.8% (20.2% in Fy21)
Net debt to equity - 0.37 (0.22 in FY21)

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