What was the reason for the sharp fall in the stock price of Sequent Scientific on 11 August?

The stock may have been a favourite of trades and investors in the last one year since the Carlyle deal, but Sequent Scientific fell by 16% after it reported an 86% fall in its consolidated PAT for the Jun-21 quarter. Of course, in absolute terms, it was not much as the profits fell from Rs.19.35 crore to Rs.2.65 crore. However, the top line revenues were up 8.6% on a yoy basis at Rs.321 crore.

The formulation business reported growth above 15% but the pressure came from the API business, which showed negative growth after several quarters of robust growth. Due to the pressure in the API business, which saw a spurt in input costs, EBITDA was down 23% at Rs.35.8 crore and that is what spooked the markets. In addition, the EBITDA margins contracted by 460 bps to 11.2%.

Meanwhile, Sequent confirmed that the contribution of regulated market business had gone up from 66% to 72% on a yoy basis. Sequent Scientific currently has 8 manufacturing facilities spread across Turkey, Brazil and India with the Indian site at Visakhapatnam being the only site with USFDA approved veterinary API facility.