Syngene International Ltd’s PAT up 2.87% YoY to 753 mn  

Syngene International Ltd Q1FY24 results updates

Syngene International Ltd’s PAT up 2.87% YoY to 753 mn  

Company Overview:

Syngene International Ltd, founded in 1993, is a leading contract research organization (CRO) offering comprehensive research and development services to pharmaceuticals, biotechnology, medical devices, and various other industries on a contractual basis. Over time, the company has expanded its services to include integrated manufacturing services along with research and development, catering to diverse sectors such as pharmaceuticals, animal health, agrochemicals, consumer products, and chemical polymers.

Geographic Footprint and Campus Sites:

Syngene operates across four countries, including the USA, Europe, and Japan, and its home base in India, supported by a wholly-owned subsidiary, Syngene USA International. With a dedicated workforce of over 8,500 employees, including more than 6,000 scientists, and a vast network of 2,900+ suppliers, Syngene effectively serves 400+ clients worldwide. The company’s primary research, development, and manufacturing hubs are located in three campuses in Bangalore, with plans for expansion into Hyderabad and Mangalore, focusing on research operations and pharmaceutical ingredient manufacturing, respectively.

Business Divisions:

Discovery Services: This division focuses on early-stage research, spanning the identification of relevant biological targets in patient populations to delivering drug candidates for further development.
Development Services: Offering a range of services from pre-clinical to clinical trials, this division encompasses drug substance and drug product development, along with associated services, to demonstrate the safety, tolerability, and efficacy of drugs.
Manufacturing Services: Syngene’s Manufacturing Services handles commercial-scale manufacturing of small molecules from a cGMP-compliant API manufacturing campus in Mangalore and provides development and manufacturing services for large molecules from a biologics manufacturing facility in Bangalore.
R&D Centers: These multi-disciplinary teams, housed in dedicated facilities, focus on biopharmaceutical research for clients that include major players like BMS, Amgen, and Baxter.

Valuation and Key Ratios:

As of the most recent data, Syngene is trading at a multiple of 64.1x FY23 EPS of 12 Rs, with a current market price of 771 Rs, surpassing the industry PE ratio of 28x. The stock is trading at 8.56x its book value of 90 Rs per share. The company boasts healthy return ratios, with a ROE of 13.4% and a ROCE of 14.5%. The interest coverage ratio is robust at 14.5%, indicating the company’s strong ability to service its debt. The EV/EBITDA ratio stands at 29.7x.

Q1FY24 Results Update: Consolidated

In the first quarter of FY24, Syngene exhibited robust performance, primarily driven by its development and manufacturing services, with continued growth in the research division, including Discovery Services and dedicated centers. The company achieved a significant milestone with the successful US Food and Drug Administration (US FDA) approval for its API facility in Mangalore, a crucial development for its small molecule commercial manufacturing capabilities. Moreover, Syngene acquired 17 acres of land in Genome Valley, Hyderabad, to support its long-term growth in the research business.

Despite facing a 28.02% QoQ decline, Q1FY24 revenue grew impressively by 11.06% YoY, reaching 7,158 Cr mn. However, the EBITDA decreased by 4.94% YoY, dropping to 1,634 mn, primarily due to a substantial increase in raw material costs (34.68% YoY) and operating expenses (7.68% YoY). EBITDA margins declined by 380 bps YoY, settling at 22.83% due to the heightened operating expenditure. On the bright side, the bottom line improved, with PAT growing by 2.87% YoY to 753 mn, driven by a 35% YoY decrease in interest costs and a 47.74% YoY increase in other income, offsetting the impact of higher raw material costs and OPEX. The PAT margin remained flat at 10.52% (PQ-11.36%). EPS for the quarter stood at 1.88 Rs (PQ-1.84 Rs), reflecting a 2.87% YoY increase, despite a 60.16% QoQ dip.


Syngene International Ltd continues to exhibit strong performance in its core business divisions, with significant growth prospects driven by expansions in research and manufacturing capabilities. The successful US FDA approval for its API facility in Mangalore and the acquisition of land in Hyderabad signifies the company’s commitment to long-term growth. Despite some short-term challenges related to increased costs, Syngene maintains a healthy financial position, making it a formidable player in the contract research and development industry.


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