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Syngene Q3FY25 - Decent growth although FY25 revenue growth guidance lowered from high-single digit to mid-single digit

ICICIdirect Research 24 Jan 2025 DISCLAIMER

Revenue grew ~11% YoY to Rs 943.7 crore driven by Discovery Services division (~60% of the sales) on the back of conversion of on pilot projects into full-fledged contracts and decent traction from CDMO business (~40% of the sales) which witnessed increased traction in biologics.

EBITDA grew ~23% YoY to ₹ 283.6 crore with margins improvement of ~293 bps YoY to 30.1% driven by GPM improvement of ~266 bps YoY to 74.8%. 

The management has trimmed down the full year revenue growth guidance from high single digit to low-mid single digit as the assessment of improvement in US biotech funding scenario has not panned out as per management expectations and in fact the order flows are delayed by almost 8-12 weeks.

However, the management continues to be optimistic about the prospects of both the discovery and Development / manufacturing based on new collaborations on integrated projects that cover the scope from drug development to clinical stage manufacturing.

We expect some quarterly fluctuations to persist; however, we remain unperturbed as the long-term outlook remains strong, supported by opportunities arising from China rebalancing and an improved biotech funding environment in the US. The company remains a compelling play in the global CRDMO space with it’s track record and facilities.

We value Syngene at ₹ 960 per share.

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