Sequent Scientific Limited (NSE: SEQUENT) Q3 2025 Earnings Call dated Feb. 13, 2025
Corporate Participants:
Abhishek Singhal — Company Secretary. Investor Relations Consultant
Rajaram Narayanan — Managing Director and Chief Executive Officer
Saurav Bhala — Chief Financial Officer
Hari Babu — Whole-Time Director and Chief Executive Officer, Viyash Lifesciences
Analysts:
Unidentified Participant
Shiwani Kumari — Analyst
Harshit Dhoot — Analyst
Bharat Sheth — Analyst
Thomas — Analyst
Himanshu Binani — Analyst
V.P. Rajesh — Analyst
Presentation:
Operator
Please wait while you are joined to the conference. The conference is now being recorded ladies and gentlemen, good day and welcome to the Sequent Scientific Limited Q3 FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start and zero on your touchstone phone. Please note that this conference is being recorded. Thank you.
I now hand the conference over to Mr Abhishek Singhal. Thank you, and over to you, sir.
Abhishek Singhal — Company Secretary. Investor Relations Consultant
Thank you,. A very good morning to all of you, and thank you for joining us today for Sequent Scientific’s earnings conference call for the 3rd-quarter and Nine-Month year ended financial year 2025. Today, we have with us Mr Rajar Ram, MD and CEO, Sequent Scientific; Dr Hai Babu, Whole-time Director and CEO of Life Sciences; Mr Saurabh Balla, CFO, Sequence Scientific; and Mr Rama Kant, CFO, Life Sciences to share the business and financials for the quarter.
I hope you’ve gone through our results release and the quarterly investor presentation, which have been uploaded on our website as well as the stock exchange website. The transcript for this call will be available in a week’s time on the company’s website. Please note that today’s discussion may be forward-looking in nature and must be viewed in relation to the risks pertaining to our business.
After the end of this call, in case you have any further questions, please feel free-to reach-out to the Investor Relations team. I now hand over the call to Rajaram to make his opening remarks.
Rajaram Narayanan — Managing Director and Chief Executive Officer
Good morning, everyone, and a very warm welcome on the call for quarter three financial year ’24-’25 results. We are now in the final quarter of this financial year, and I am delighted to report that the company has continued to accelerate its performance on-top line and on margins.
I will share the performance of the quarter in more detail as well as the progress on the merger with Vyash Life Sciences, which was announced in September 2024. I’m joined on the call by Dr Hari Babu, Whole-Time Director and CEO of Vyash Life Sciences. And also joining on this call is Saurav, Chief Financial Officer of Sequent; and Mr Ramakan, CFO of Vyash. Coming to the performance of this quarter. In-quarter three FY ’25, our consolidated revenues came in at INR3908 million, which is the highest sales in any quarter in the last three years. This translates to a growth of 18.7% compared to the same quarter last year, that is quarter three FY ’24.
At the end-of-the first-nine months of the year, revenue growth stands at 14% versus the first-nine months of last year. This growth is on the back of strong efforts on margin improvement through a combination of pricing, product mix and cost management. EBITDA pre-ESOP for this quarter came in at INR494 million, which represents approximately 64% growth over quarter three last year.
When we consider the first-nine months of the year, EBITDA pre-ESOP at INR1424 million represents a 116% growth over the first-nine months of last year. Our cumulative PBT at the end of nine months has also grown to INR280 million, which is nearly 150% growth over the same-period last year. Clearly, the momentum is evident in the results and we are therefore confident of systematically improving on all parameters going ahead. I will share some qualitative highlights and more details are available in the investor presentation.
There are obviously some developments globally, which are geopolitical in nature. While we are alert to the event, our focus is on our operations and our customers. Starting with our formulations business, our operations in emerging markets led by Turkey continues to grow in healthy double-digits, both in local-currency as well as in reported sales.
Additionally, we are growing exports out of Turkey and our recent EU certification at the factory in Ankara will start giving us more opportunities. The formulations business in Europe is growing in volume as we introduce new products for Europe and other markets. In Latin-America, we have extended our operations beyond Brazil and into Mexico and Pero.
In addition, we continue to build a global platform for gut health products based on natural actives, which are increasingly getting preference as users and regulators get stricter on the irrational use of antibiotics. I had said last quarter that we are doubling down on India as a key market to accelerate growth in formulations.
Our initiative, Project Odan to reach more veterinarians with an expanded field force is now yielding results again with double-digit growth everywhere. We will increase our reach again next quarter and that should prepare the foundation for higher growth in the next year when the impact is annualized.
Coming to APIs we see a positive swing in some therapeutic areas, especially in the deworming category. Our API revenues for the quarter have grown sequentially as well as versus the same period last year. Our factory in Mahad has received additional WHO pre qualification approvals and this should position us well for supplies to new formulators.
During the quarter we also completed one new CEP filing. Our margins continue to hold or improve and we continue to drive the next phase of margin expansion with our new CIP initiatives. As discussed during the merger announcement, we will be very well positioned in RND as a result of the merger with Biash.
You will hear more about this as and when we are in a position to share more information as we head towards the completion of this financial year. I am very glad that the tough decisions we took last year on creating a more profitable product mix, closing a high cost operation in Europe and driving cost improvement programs systematically have now helped us reach a place from where we can accelerate growth. Our balance sheet is becoming stronger and with the merger it would be substantially strengthened to support an aggressive play in areas like healthcare for companion animals.
I will now hand over to Saurav to share the financial results of Sequence Scientific Limited and then invite Dr. Hari to share the highlights of Vyash and the consolidated entity. Over to you Saurav.
Saurav Bhala — Chief Financial Officer
Thank you Raja Good morning everyone. It’s a pleasure to be here today to provide the key insight to our strong financial performance for both quarter three of financial year 25 and ninth month of financial year 25 as well, I will also share the update on the progress of our strategic merger with GAJ Group and Sequent Research, one of our wholly owned subsidiary. Starting with Q3 Financial Highlight for CQuent, we achieved a total revenue of Rupees 3,908 million for Q3.25,
Delivering a strong year on year growth of 18.7% and a quarter on quarter growth of 6%. Our formulation business recorded Rupees 3,008 million in revenue, registering a growth year on year quarter three growth of 19.2%
And a quarter on quarter Growth of 8.9%. On a constant currency basis. The API business posted Rupees 812 million in revenue demonstrating a year on year growth of 16.1%
And a quarter on quarter growth Of 4.5%. The gross margins improved by 300 basis points on a year on year basis rising from 45.2% to 48.2%.
There was also a 120 basis improvement on a quarter on quarter basis from 47% to 48.2%. Our EBITDA pre ESOP for the quarter amounted to rupees 494 million reflecting a strong year on year growth of 63.8% and a quarter on quarter increase of 10.5%.
The EBITDA margins pre ESOP stood at 12.6%, delivering a healthy improvement of three hundred and forty basis points on a year on basis. Our PB3 registered a very strong growth in Q3 of 444% from rupees 15 million exponential year Q3 to rupees 81 million in the current quarter.
Coming to the highlights of for the nine month ended financial year 25, for the first nine months of financial year 25 we achieved a total revenue of rupees 11497 million reflecting a year on year growth of 14%. The formulation business recorded rupees 8849 million in revenue contributing a year on year growth of 21.9% and the API business posted rupees 2509 million in revenue reflecting a year on year growth of 7.8%
Both on a constant currency basis. The gross margin improved by 280 basis points from 44% to 46.8% driven by focused strategic actions on our such as soles, mix optimization initiatives and very selective price increase across regions.
To maintain our margins, EBITDA Delivery stood at Rupees 1.424 million which is a significant growth of 116.5% per on year basis.
Our EBITDA margins pre ESOP increased by rupees by 590 basis points on a year on year basis increasing from 6.5% in nine months financial year 24 to 12.4% in nine month ended financial year 25.
Acting our strong focus on driving profitable growth across segment on a YTD basis, our PBT also grew very strongly by 49%. Coming to other key items in Q3 financial year 25 we recognized a net monetary gain of Rupees 5 million on account of the hyperinflation accounting adjustment as required under India’s 29 for our Turkey operation which is which remains to be in a Hyperinflation Economy During Q3 25 a forex loss of Rupees 52 million was reported primarily driven by the sudden depreciation in currencies of Brazil, BRL and Euro depreciation against the USD. Large portions of this forex loss is unrealized in nature and is required to be accounted following the relevant accounting standards further the impacted currencies.
As mentioned earlier, we have already started seeing a partial reversal in the subsequent month. Regarding the tax and pat, I need to highlight in Q3 last financial year 24 a one time significant tax benefit was recognized in our Turkey operations due to change in hyper accounting methodology as mandated by Turkey’s regulatory requirement. This has resulted in a one time exceptional tax benefit which was accounted in financial year 24 but which pertain to prior years from financial year including financial year 21, financial year 22 and financial year 23.
If we exclude this one time Turkey exceptional tax benefit in last financial year then even the PAT has shown a very strong growth of almost about 65% on a like to like basis for Q3 financial year 25 coming to update on the Merger Process Progress the merger scheme which was approved by our Board of Directors involves a merger of vast Life Science Private Limited in its subsidiaries as well as secret touch of our police owned subsidies with Sequence Scientific Limited. I am pleased to report that we have made good progress so far on the merger process as follows. The Board approval as communicated last time was received on 26th September after which the process started.
The Competition Commission of India has already approved our application and the approval was received on 21st of January 2025. The scheme is under review by the exchanges in SEBI and that is going very fine. We expect the SEBI approval changes to come soon and hence we remain on the guided timeline for completion of the merger process.
In summary, our strong financial performance in Q3 and nine months for the financial year 25 underscores the success of our strategic initiatives, focus on driving operational efficiencies and our unwavering focus on profitability. The progress we have made in our M and A activities further strengthens our foundation for long term growth and expansion. We remain committed to delivering value for all our stakeholders and are confident in our trajectory towards the sustained growth.
With that I now hand over the call to Dr. Hari to provide the details on the performance highlights of the Vash Group. Thank you.
Hari Babu — Whole-Time Director and Chief Executive Officer, Viyash Lifesciences
So thank you Saurabh and Raj for the update. I’m very happy to share VHS strong consistent performance and also update on the Merger scheme. We ash recorded strong performance in the quarter with acceleration in revenue growth and margin expansion year over year.
Our core strength remain R and D Manufacturing, IP and also business development activities. These have been supplemented by efforts made over last 24 months in development of high margin complex products and also promoting those products. Rationalization of low margin business which includes intermediate and continuous cost reduction program on the various products for this quarter Q3 FY25 our revenue grew by 19% year on year to 384 crores and adjusted EBITDA grew by 68% to 68.5
Crores through the corresponding quarter. Last year we had shared ebitda margins of 17.8% which is almost more than 5.2%
Of corresponding quarter. Last year our nine months FY25 our revenue grew by 10% and EBITDA grew by again 42%. And our nine month EBITDA margins of around 17.4%
Again which is almost more than 3.9% over last nine months. So nine months adjusted EBITDA is 189 crores.
In line with previous quarters we had generated 38 crores of free cash flow in this quarter and 177 crores of free cash flow in last nine months. Borrowings reduced by 28 crores in this quarter and 122 crores in last nine months. And of course our net debt EBITDA ratio is continuously coming down which is at 0.4x.
Now we want to reiterate that lot of cost below ebitda particularly exceptional items which are mostly related to merger activities and one of the amortization of acquisition intangibles. When we acquired a few companies actually we had amortization intangibles are largely non cash and non recurring. So we as adjusted pat we presented in the investor presentation is an indicator of our steady state standalone property probability.
Sorry. And also it’s reflected in our cash flows and continuous debt reduction. Business growth is supported by investments in multiple strategic areas and a strong operating base which we’ll cover now.
Our business has strong momentum across portfolio selection, validations, filings, launches and adding more geographies and more customers new product launches and filings. We launched two new products in this quarter in USA and has filed three products in this quarter for US and Europe. And as you know our portfolio is very Strong.
We have 25 products in pipeline across different stages. And we completed four validations in last quarter. And also we received five regulatory approvals in this quarter from various agencies.
And these are in addition to what we do CDMO and also CMO for big pharma as well as big generic companies. We had touched upon our complex portfolio market leaders focus on innovative relationships and our management team is continuously focused on cost improvement of course continuously adding new products and geographies in this quarter. And now let me take you through major updates for FY20Q3.
Combined revenues of two entities grew by 19% and EBITDA grew by 66%. And the combined EBITDA stands at 118 crores this quarter with 15.2% margins for nine months combined revenue grew by 12% and EBITDA grew by 67%.
And combined EBITDA for nine months is 332 crores with 14.8% margins of course with improvement of 4.8% from last year the combined net debt EBITDA ratio is now 1.2%
It’s continuously coming down whereas last quarter it was 1.4, it’s coming down to 1.2 and quarter on quarter you can see that it’s continuously coming down.
So now we have started to plan integration of two companies and realizing synergies and we have received CCI Pro as sour mentioned and started prioritizing our key synergies with multiple areas. Of course we also mentioned in couple of areas in the investor presentation and few of them are like R&D. We strongly believe we have strong R&D strength and IP focus. Definitely, it’s going to accelerate development for the animal health products and which can realize very quick, I can say. And of course, optimization is the key for entire group since we have large network, multiple sites, 15 sites all over the world. And our network optimization and also combined procurement can create a big synergies and in 12 to-4, 15 months, we can see. And coming to the business, we should be able to leverage our key relationship from both companies. Of course, we already started seeing from last quarter, few companies started actually giving us more business from both sides. Whereas couple of contacts, actually adding business to Sequent. At the same time, as we mentioned earlier, couple of big farmers also started approaching VASH and few products. Others, of course, all other areas supporting functions, we started integrating maybe next six, eight months, we are going to complete this integration activity. And most probably all these synergies we are going to present sometime in Q1 FY ’26 to our Board and we’ll share to the investors. So the mergers came, as Saurab mentioned, we already received CCA approval and we’re waiting for semi approval sometime and we are expecting sometime this month or next month. Once we receive a SEBI approval, we’ll go to NCLT and it may take another six to eight months. And I think overall activity is going to be complete by September or October as mentioned earlier. So with this, I will open for questions or clarifications.
Questions and Answers:
Operator
Thank you, everyone., we can take the Q&A, please. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Jagdesh Sharma, an Individual Investor. Please go-ahead.
Unidentified Participant
Hi, sir. Congrats on an excellent quarter, especially on-sales and EBITDA. I have a few questions. The first one is like what is our driving growth in the emerging markets and Europe? My second question is like are our margins improving in all our business segments? My third question is, will we cross INR1,500 crores of sales in FY ’25? And my last question is like what is it — why is our PAT is not moving at par with our EBITDA this quarter and what is our plan for it?
Rajaram Narayanan
So these are the four questions. Okay. So let me answer some of them. So firstly, of course, what is driving growth for us both in emerging markets in Europe, it’s a — it’s the work which has been done in, as I said earlier on the product mix as well as new launches and pricing. Specifically, if you look at it, our biggest market in emerging markets is Turkey. And in Turkey, we have stabilized the business and we are seeing growth coming both on volume as well as on pricing. In addition, export, which is a priority in Turkey because it is a good base and we have a strong manufacturing unit there. Our exports have started growing out of Turkey to the neighboring North Africa, Middle-East region. As far as Europe is concerned, the volume growth has started in Europe. We are also launching — in fact, we have launched new products in the area of companion animals and that is getting us growth. And in both these markets, the growth typically keeps happening because in the first phase, you launch within the country and then in subsequent quarters, you start expanding it to the other markets. So you would launch in Spain, which is where we have the base and then we start expanding it to other countries in Europe and sometimes even outside of Europe. So that’s how once you launch a product, you are able to over next two to 3/4, get your growth by expanding it. So that’s really the reason why we’re getting the growth over there. The second piece in terms of margins, I think we have shared before, margins are a combination of product mix that a combination of some work which has been done in the area of cost-improvement programs and of course, you know, pricing, particularly in an inflationary economy, we managed to get prices without actually having any volume impact of significance. The third question, will we reach INR1,500 crores in India on Sequent? Obviously can’t give you any guidance on that. But mathematically, if you look at it, I think you can calculate what the 4th-quarter could be, assuming that it is pretty much close to the current one. So we should be getting past that at least in terms of the direction we are in right now. I think the last one you have is on PAT and I think Saurav explained that it was — one is that in the same quarter last year, we had an exceptional gain in terms of attack benefit in Turkey on account of local accounting requirements. And therefore, if you really look at it, it is more an impact of that base, which is why it is looking like the PAT has declined. But otherwise on a standalone basis, I mean, if you exclude for that, PAT is in fact also improving. Nevertheless, I think going ahead, our focus is as we look at both the finance costs as well as our capital investment, which we will be through the synergy of the merger improving, we should be able to consistently improve on our PAT
Unidentified Participant
Yeah. Thank you.
Rajaram Narayanan
Okay.
Unidentified Participant
Thank you, sir.
Operator
Thank you. Participants who wishes to ask a question may press star and one. The next question is from the line of Shivani from Molark Networth. Please go-ahead.
Shiwani Kumari
Hi, sir. Am I audible?
Rajaram Narayanan
Yeah, yeah.
Shiwani Kumari
Hi, congratulation on the good set of numbers and thank you for the opportunity. Sir, a couple of questions. One, I wanted to understand that what is the seasonality pattern? We have — while we have seen growth in emerging market quarter-on-quarter in Europe and Indian market, the growth was slightly muted. So one I wanted to understand that. And secondly, if you can also give me a split between split of growth from product launches, volume and price? Third, I want to — I wanted to understand the Vertis product status in Indian market? And lastly, what is the weight of companion animal health product in our portfolio.
Rajaram Narayanan
Okay. So first question on seasonality. I think seasonality is there in every individual country. There is no seasonality as such across the sector. So therefore, you will find different impact coming on that. For example, in India, typically, the seasonality is there because quarter three you tend to have a reduction in terms of some of the prevalence of diseases as well as the requirement for these medicines. So you will find typically sequentially quarter three tends to be lower, but I think year-on-year you will continue to see the growth because of the activities that we are doing. And the same thing applies in other countries as well. It is a combination of when the kind of mix you have, whether you have companion animals, whether you have production animals, so there is always seasonality in this in different countries. But I think what you should be focusing on really we should be looking at is on a year-on-year growth, which is coming in the respective markets and we are happy to say that is something which is consistently coming over there. So the second question on this — on volume, new products and price. Our pricing typically, you know has been different. I think in most countries, we would be expecting a pricing growth of between 3% to 5% on a full-year basis. And in-markets like Turkey, of course, it would be substantially higher in-going well because of the high inflation, because the inflation there is well into 40% plus. And therefore, we obviously take prices much more. So typically in our basket, if you look at it in a — if you say that we grow between 10% to 12%, you should have about a third in each of this. So you tend to have about 4% to 5% coming from pricing, about 4% to 5% coming from volume. And then at this point of time, about 2% to 3% coming from new products. That’s the typical combination, which is there in this business. But our effort is really to accelerate the contribution of new products. Last quarter, we began to see a higher combination coming from — contribution coming from new products because some of the launches which we have done have now begun to roll-out to other markets. On the Zoetis distribution status, yes, we’ve been — there has been a product which was discontinued by Zoetis some time ago due to manufacturing issues and therefore that is still impacting us in terms of part of the base, but we understand from our partners that they have made alternative arrangements to resume manufacturing of that product and therefore, we expect it to come back somewhere in the next two to 3/4. Yeah, because it is the rearrangement of some of their manufacturing facilities and therefore, they have put a stop to that for some time, but that should continue and come back to us in two to 3/4. But obviously, we are — our growth is without that. So we are now beginning to grow even the business, which is without the Zoid distribution at a much, much faster rate than what we had earlier. On the contribution of companion animals varies country-to-country, depends on whether it’s distribution or not. India, we don’t have companion animals. In Europe, in some parts of Europe, it is as high as 30% to 40%. So — but I’d say on an aggregate basis, it is probably between 5% to 8% companion animal contribution right now on the phone. Thank you.
Shiwani Kumari
Thank you so much.
Operator
Thank you. The next question is from the line of Harshit from Diamond Asia Capital. Please go-ahead.
Harshit Dhoot
Hi, sir. Good morning. Thanks for the opportunity. Just a few questions, sir. So the emerging market did phenomenal business during the quarter. So can you assume that this run-rate is sustainable going-forward as you have launched your products in the new countries? This is the first question. And the second question is, as we have started manufacturing from the Turkey and we have started exporting from that market, so what kind of the cost-benefit that we are getting and what — how should we forese the gross margin going-forward? And the third thing, we are hearing the bulk of cases have started to rise. I mean, do we have exposive there, specifically in the US market because we report the Europe emerging markets and all. So are we having exclusive there? And the last thing that you highlighted earlier, the margin expansion will continue with the new CIPH initiatives. So can you please throw some lights on that? Thank you.
Rajaram Narayanan
So I couldn’t hear you very clearly, but I think the first question of yours is that if the emerging market growth, is it sustainable and what would it continue, right?
Harshit Dhoot
Yeah. Because this quarterly run-rate was very strong, right? From INR115 crore INR20 crores, we have jump to around INR137 crores. So this quarterly run-rate is sustainable.
Rajaram Narayanan
So I think we are more than the run-rate, I think the fact that we should be growing in double-digits in emerging markets is what we should anticipate going ahead on a quarter-on-quarter basis. There will obviously be some variations depending on which of the emerging markets is seasonal, non-seasonal at that time. But — and again, our emerging markets are founded on some very strong basis. Turkey is a very strong manufacturing and local export base for us. And so is Brazil. So these are both part of the emerging markets that we have. So it’s not just a trading operation for us. Therefore, we expect that you should — we should grow at double-digits in emerging markets year-on-year. On a sequential basis, I guess we will hopefully show continuing growth all-the-time. On the second part on Turkey manufacturing, it’s — of course, there is cost competitiveness of having in Turkey, but Turkey, we already have an existing plant. Our growth is coming for two reasons. One, we have used Turkey as a base to start exporting to regional North Africa and Middle-East markets, which are fast-growing animal health markets, particularly for the portfolio, which is presently available in Turkey, yeah. And we have an injectable manufacturing plant, which is not — you know, not only companies have an injectable manufacturing plant in that region and therefore, that’s an area which is for us growing. Second is that we closed our operation in Germany last year, but some of the products from Germany are being transferred to Turkey. So we do not want to lose the market opportunity for those products. So one-time we do have a drop-in sales, which used to be earlier from Germany, but now we expect those sales to be revived out of Turkey. And therefore, some of that will come back and that’s how we see growth coming from Turkey. Our gross margins, I think in Turkey, as you begin to get volumes, you should get some advantage because at this point of time, the currency is not sort of declining as sharply as it used to say two years ago and the government policies generally have also been very prudent and we are seeing therefore a stability in that market. I didn’t understand the question on US markets, whether the current situation is impacting us?
Harshit Dhoot
No, no. So sir, do we have exposure in the US market because we are hearing that bulk of cases has started to increase there. So are we catering to the bird segment as well?
Rajaram Narayanan
What segment? So do any formulations to the US at all, okay. From Sequent, there is of course a strong business which Viash has and I’ll ask Dr Hari to talk about it on the exposure to the US but we do not. On the API side, of course, we have a USFDA plant in and we have nine of them in. So there is APIs which are going to the US. But at this point of time, I’m not seeing any big risk-on that, Dr Harri, on the US part.
Hari Babu
I think should have saying risk, we can see the opportunity for us. So human health, we have ES presence of course, good part is we have manufacturing site in ES. If at all, there is a positive that will be upside for years, if any actions comes from Trump. Other area where we can see lot of potential for animal health. So yes, generic is catching-up a lot for animal health that we see last six, eight months. A lot of clients are asking actually to launch those. I think we can see the potential for API selling API animal health API business to use and also maybe in future, we are going to explore formulation for animal health also. And we don’t see any risk at this point if we have small exposure, US formulation, but definitely that will have some additional advantage for that.
Harshit Dhoot
Okay. So do we also cater the bird flu segment as well?
Hari Babu
No. Bird flu right now.
Harshit Dhoot
Okay. And one, sir, OpEx part, this quarter it was a bit higher side. So you described it in the PPT that because of this inflationary environment in Turkey and spending for the domestic market. So from what — how should we see the opex part going-forward? It will kick into the revenues going-forward and then it will normalize on the margin part, how should we see that?
Rajaram Narayanan
But clearly going-forward, we expect that you know as the proceeds and as the scale improves the opex as a percentage should start moving down at least for what is not business development-related opex, right, from the normal sort of G&A and things like that. But I think here there has been a one-time thing is — it’s not exactly onetime because there has been a union-weight settlement, which has happened in Turkey because of which the base has got revised and then it remains steady for union arrangements for a long period of time. So that’s why there’s a bit of change in the opex.
Harshit Dhoot
Okay, sir. Thanks.
Rajaram Narayanan
Thanks a lot.
Operator
Thank you. The next question is from the line of from Quest Investment. Please go-ahead.
Bharat Sheth
Hi, Mr and Hari, congratulations on good performance. Sir, first of all, I have one question on some of the question on Sequent. Now export out of Turkey has already started. So how do we see going higher that can I put play as in a natural so that I mean the currency fluctuation really do not affect us.
Rajaram Narayanan
So is that any other question,?
Bharat Sheth
Sure. Yeah, yeah. And secondly is now when we have started also in the — expanded our footprint to Mexico and Peru in South America. And third, you have stated in your opening remarks that now we will see the accelerated growth. So if you can give some color on the sequent part that will be of a great help. And then I have some strategic question, I’ll come back.
Rajaram Narayanan
Okay. So the first question on Turkey, the thing, yes, we import APIs and some packing materials, etc into Turkey, either directly or indirectly. And our exports today have — from this last quarter onwards, actually started exceeding the imports that we have. And therefore, we now have a pretty natural hedge as far as currency is concerned and we expect the exports to keep growing well-ahead of our imports. So while, of course, that does not mean that we will not have you know, currency fluctuations and during an in-quarter thing, but on an annualized basis, so we are protected from that. And that has been an effort now for some time. And so that, of course, will keep growing in our view on export on Turkey. So that’s you will — unless something very adverse happen, the business is now naturally with exports more than imports. The second question that you had is on what we are expanding and what is going to be the growth. Yeah, I think we are now in a position. We have been guiding for a while that we expect to do double-digit growth on the business, both on-top line and on margins, EBITDA, we were looking to move closer to 15%. I think we are now in a position where our top-line should grow double-digit more-and-more comfortably as we began to expand into some other countries. I can’t — Mexico, Peru, et-cetera, we’re not part of our agenda earlier, but now we have started using Brazil as you know, because it’s stabilized over there as a base for the rest of Latin-America. And these are strong markets for animal health. So these will come. We’ll probably share a bit more when we have a stronger sort of base. Right now, it’s early quick improvements that we are getting in these markets. Yeah, I will leave you to ask the other questions to Dr Hari, the strategic ones you had.
Bharat Sheth
Yeah. So, good morning, Ari Babu.
Hari Babu
Good morning.
Bharat Sheth
Sir, I mean our past nine months, our growth was little — I mean kind of a high-double — high-single-digit or low-double-digit. From this quarter onward, we have — our growth is a high-teen. So how do we see, I mean from here onward, we are growth as well as the EBITDA margin, whatever we have expanded, where do we see
Hari Babu
Let me start with. So you must be seeing actually year-on-year, it’s close to 20% growth on-top line. Correct and EBITDA margins are very-high. As I explained in my previous quarter meetings also, if you can see our opex percentage versus the top-line, OpEx remains stable. Why? Because our utilization is keep on growing quarter-on-quarter. Since OpEx remains same, our EBITDA margins are continuously growing. So this is going to continue definitely next couple of years, because still our capacity utilization is around 60% and we have at least, if not 100% 20% 25% pre-capacity to add product. And also, as you know, API business, every year, 10%, 15% we can improve capacity without adding any CapEx while doing cost optimization. So this will continue, definitely will grow double-digit, absolutely no issue on that. And also our recent investments last, 12 24 months, you must-have seen a lot of products have been developed and fired. And recently, we also added onco portfolio. A lot of products are coming in onco portfolio. And in addition to that, we also started developing few things for CDMO, especially for big pharma and also big generic. That’s continuously adding. Last two quarters, it’s added reasonable in addition to whatever our internal products we filed, last nine months, we must-have added at least six, eight products under the CDM or CMO activity. So that activity is growing. So is going to grow continuously, definitely double-digit and EBITDA will be stabilized at some point of time, may not be 60% 70% level, but it will be always better than the top-line growth next couple of years. And when it comes to combined and definitely can see combined company growth. As we mentioned, synergies, couple of synergies, we are very actively working on that. So while improving the capacity utilization, same as we had combined entity also our margins are going to grow because we don’t need to add any additional people or much capex, of course, there will be some optimization capex continuously. But it’s going to benefit combined entity near-term, mid-term as well. And the synergies whatever initiated definitely, it’s going to contribute in mid-term. Couple of things may not contribute in short-term, whatever the sales expansion or whatever synergies, optimizing few things. So it’s going to show maybe in 12 to 18 months. So we are pretty confident this will continue to grow. Next three years actually definitely will be very strong growing company combined entity. Yes, sir. Yes.
Bharat Sheth
In current year, I mean FY ’25, we will be — combined entity will close somewhere around INR3,000 crore. And for ’27, we were looking for a kind of a INR4,000 crore. So with this kind of now background and you having a having coming both the company more closer. So do we see that there is upside room to grow above 4,000 at the end of ’27 because the kind of portfolio, geographic expansion and newer higher growing category is helping us.
Hari Babu
Normally, okay, as a principal, we don’t give guidance, but we can expect very strong growth in FY ’26, ’27. Definitely ’27 is going to be much, much stronger because whatever initiatives it takes 24 months, already we started those initiatives, but FY ’26 also will be growing very strong both top-line and bottom-line. So I can’t disclose the number, what is that but we’ll reach our expectations.
Bharat Sheth
Thank you.
Operator
Sorry to interrupt. May I request Mr to you. We have participants waiting for this. Thank you. The next question is from the line of Thomas from. Please go-ahead.
Thomas
Thank you. Would it be possible to provide some more color
Operator
Sorry to interrupt. May we request you Mr Thomas to speak a bit louder. We are unable to hear me.
Thomas
So currently the secret margins are closer to 12.5%. If you could provide some color on what will help to ensure that it moves closer to the 15% band over the next 12 15 months, that was one. And two on Vyash, as we hope to have higher-growth, the new opportunities which we are looking on the CDMO space is more in the area of human health or we are exploring more in the area of animal health, if any color could be provided? Thank you.
Hari Babu
Okay. I will answer both sequent margins improvement 12.5%, right, to-high teens, whatever we were talking. So it’s actually gradually it’s going to increase next 12 to 18 months. So you know lot of initiatives have been made in Sequent, okay. Is going to help a lot in R&D as well as manufacturing. And Sequent continuously doing cost optimization. There are two-parts. One is optimizing the manufacturing network and R&D, it’s going to create a value, which will definitely improve margins and also utilizing manufacturing network. So we see a couple of opportunities to grow API business, especially in a lot because the most important area we are focusing next 12, 18 months is the API improvement. Formulation is doing pretty good. So we are pretty confident actually next 12 to 18 months, Sequent is going to grow more than, 15% 16% on the two fronts. One is optimizing those things and helping from ash perspective. The second question you were asking, actually is a CDMO under CMO. So as you see, we initiated CDMO last 1.5, 2 years. So with big pharma, mostly lifecycle management with big pharma. Already we supplied few products, in fact, three products, which are their large-volume products. We supplied and also they started qualifying our products. But you know, innovators, it takes normally two to four years depending on the markets. So we started validating they started filing. So that business is going to start in FY ’26, few advanced intermeds as well as API. But definitely FY ’27, it’s going to come — come — contribute substantial amount on those things. Those products are going to qualify us for the — their global requirement as a primary source. That means whatever they have business, we are going to get Jenk from that. In addition to that couple of areas especially complex molecules we tied-up with few big generic companies okay even though it looks hello, hello you have advantage to launch early because that’s why you will have anchor customer to launch day-one that will boost a lot for company. So we can see a lot activity, CDMO, CMO in these areas, next two years.
Thomas
Thank you.
Operator
Thank. The next question is from the line of Himanshu Binani from Anand Rathi. Please go-ahead.
Himanshu Binani
Sir, good morning and thank you for taking question, sir. Good set of numbers.
Operator
We are unable to hear you, sir. Your voice is briefing.
Himanshu Binani
Hello. Now I’m audible?
Operator
Yes, please go-ahead.
Himanshu Binani
Sir, good morning and thank you for taking for this opportunity and congratulations on a good set of numbers. So sir, I have like few questions largely for the margin side. So just wanted to have a sense in terms of how do you guys actually calculate the contribution of new products in that particular quarter. So — and in your opening remarks, you highlighted that the contribution has been like somewhere around 2% to 3 odd percent. So these are the products which are actually launched during this last quarter or how do you see that? So is it the products which are getting launched over the last one, two years? And the second question is largely on the margin side. So maybe if you can like help us understand in terms of the margin or the gross margin between the new launch product and the traditional ones.
Rajaram Narayanan
Are you asking specifically for Sequent or for both the companies?
Himanshu Binani
Both the companies.
Rajaram Narayanan
Okay, so maybe —
Hari Babu
So I think one is that 2% may be related to sequent, right? Okay. But overall actually the new products were two things. One is when you supply with validation quantities, margins is something when you launch new products, margins is other things. So in that, if I look at the margins for our API business perspective, there are two types of. One is the matured product launches and the other one is the new product launches like you are entering day-one for the developed markets. So mature product launches, it’s more or less same as our average regular manufacturing product. So when it comes to new product day-one launches, those launches are much better than the average mix of regular products. So it’s both actually we do both. Actually few products,, we do day-one launch and also few products. We feel like we may get exclusivities till we are hoping actually a few exclusivities soon. Those margins are pretty good. But day-one margin — product launches, margins are much better than at least maybe I can say more than 10% from the existing base. I think Sequent also is more or less applicable thing. Whatever we launch, the new product launches are better than —
Rajaram Narayanan
Typically, new product launches tend to be improving the margin that direction. Second, on formulations in general, we look at — it takes about 24 months-to — from the launch in the first market to a registration and expansion in the last targeted market, which you would have, right? So when we talk about growth coming from new products and formulations, it’s typically from sales of the product from 24 months before to now, that’s the broad period taken for registering sales. So the product should have been launched in or introduced first time in the last 24 months.
Himanshu Binani
Got it, sir. Got it, sir. Thank you.
Operator
Thank you. The next question is from the line of VP Rajesh from Banyan Capital. Please go-ahead.
V.P. Rajesh
Hi, thanks for the opportunity and congratulations on the good set of numbers. My question is more around the synergies and more qualitatively. Just trying to understand on the distribution side, what kind of synergies do you expect? And on the manufacturing side, meaning like can we use the same-facility both for human products as well as the animal products? And similarly on the distribution side, if you can elaborate a little bit more with the selling process or the distribution partners are staying, so that’s really what I was trying to get a better handle on. Thank you.
Hari Babu
Okay. Okay. Thanks for that. I think two-parts. One is distribution trends both businesses. Distribution channels are different. We don’t see much synergies in near-term in distribution, especially formulation distribution. When it comes to API distribution, definitely there is a cross-selling opportunity we started seeing for both companies where we are business generic actually is a lot of traction coming from that per sequent since it is where we see lot of that. The same bit about the expansion.
Operator
I’m sorry to interrupt you, sir. We are unable to hear you clearly. Can you please repeat?
Hari Babu
Yeah. Okay. Is it clear now?
Operator
Yes.
Hari Babu
Okay. Sorry for that. I don’t know. So I started with the distribution, formulation distribution since both companies’ distribution channels are completely different, we don’t see much synergies in near-term. Long-term, once we start establishing by promoting human health formulation in these countries are different, but at least near mid-term, we don’t see much synergies for distribution and formulation. When it comes to API distributional sales, but definitely we see a lot of synergies in that cross-selling. Although already we see some of the important things are going up since Animal Health business has started catching-up in US generic, we see a lot of cross-selling opportunities for animal health. Same way since we started talking to big pharma, especially CDMO and we see some opportunities for Viash on that perspective. Okay. The second question, other synergies, definitely short-term, mid-term, we see a lot in especially API. R&D, manufacturing, sales as well as other functions. So already we started integrating R&D. We have started helping sequent in R&D, both new products development as well as optimizing existing products. That’s going to add lot of synergies very soon. Then manufacturing definitely we are going to. Is it clear now, am I audible?
Operator
Yes, in-between.
Hari Babu
I don’t a lot of noise is coming somewhere. So when it comes to uptake manufacturing, this is a bigger area since we have large manufacturing network, large procurement setup and large supply-chain or distribution thing. And we see a lot of synergies in that. So couple of things, network optimization and procurement — procurement synergies, whether actually buying together or definitely optimizing some of those things. And definitely shared service or support functions we are going to bring together. There will be some optimization on those areas. But these are the major areas, R&D manufacturing support functions. We can’t give the exact number, but I see there is a large potential. It’s not only closing the sites, one is always we can utilize more, but definitely, if it’s required actually we’ll optimize one or two sites also to benefit that. We can see substantial synergies in these areas next 18 24 months.
V.P. Rajesh
Thank you very much.
Operator
Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Rajaram Narayanan
Thank you. Thank you for attending this call. It is — we’re very happy that this has been a strong quarter and you are seeing the direction moving up and I think we will have more to report on both the business as well as the progress of the merger. And as Dr Harid said earlier, we will have you more granular sort of details in terms of some of the synergies and other plans that we have going ahead. So we look-forward to seeing you at the next call and thank you and have a good day.
Hari Babu
Thank you, guys. Thank you.
Saurav Bhala
Thank you again.
Operator
Thank you. On behalf of Scientific Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines