For Sequent Scientific Ltd, inorganic growth has remained the core growth strategy since 2002. It recently acquired Lyka Export’s animal health business on slump sale basis. This means the company is buying only the business and not the debt attached to it and getting a good deal within the existing framework of rapid expansion. Lyka Exports is in the cattle and diary business for the last six years hence, this acquisition is a perfect complimentary fit for Sequent Scientific. Put together, Sequent Scientific will have a combined strength of about 250 people making it a formidable global player in this segment. Over the last decade the company has emerged as an integral pharmaceutical player with a global footprint in the domain of animal health and human health. The animal health segment has been branded as Alivira, focusing on products for livestock and poultry. After getting the necessary clearances and inspections from the Andhra Pradesh Pollution Control Board, Sequent Scientific has commenced production in the Vizag facility of its Alivira animal health centre last month. The human health business is operating across multiple therapeutic segments and focusing primarily on the development and supply of high value low volume API. The company has chosen a different path of focusing on smaller old molecules to make a mark in the human API market unlike other pharma companies which are looking at products losing patent protection. While the top line has been growing at over 25% CAGR, the margins are expected to keep pace in the near future on the back of many acquisitions. Debt position has been corrected through a qualified institutional placement (QPI) issue to replace the large interest burden the company was carrying in its books. In line with its growing acquisition spree, Sequent Scientific has bought a controlling stake of 51% in New Delhi based Indo Phyto pharmaceutical company. Sequent Scientific has recently allotted 7.50 lakh shares at a price of Rs 669 per equity share to the promoter group entity showing their confidence in the company. The stock currently quoting at Rs 860 on the BSE is a multi-bagger in the making and investors with a two-year investment horizon can purchase the Sequent Scientific stock for over 100% appreciation. After testing 7,500 Nifty levels during intraday last Friday trade, the 50 share index was up 85 points at 7,489 while the Sensex rallied nearly 300 points to close at 24,616 levels. Global headwinds are impacting the earnings growth for many Indian companies and further movement in asset quality and global uncertainties are likely to be the drivers for the Indian stock markets in the near future.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.