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Syngene reports well-rounded growth, upbeat guidance - Q4 Review
What's Buzzing?
Syngene reported a strong set of numbers driven by incremental orders from existing clients, new contract executions, reflecting revival signs of the CRAMs ecosystem.
Context
Revenues grew 31.2% YoY to Rs 994.4 crore in Q4FY23. This was largely driven by its integrated services and execution capabilities, which led to such a robust performance across all its divisions. GPM came at 70.5% during the period, lower than the normal range of 72-73% due to higher manufacturing mix and higher consumables charges. On the operational front, EBITDA grew 27.2% YoY to Rs 318.3 crore whereas margins declined 101 bps YoY to ~32%. Net profit during the quarter grew 20.9% YoY to Rs 178.7 crore.
Our Perspective
In a scenario where most of the CRAMS players are witnessing a slowdown or business realignment, Syngene continues to deliver standout numbers driven by all core segments. Syngene has proposed overall capex of ~Rs 800 crore investing in new infrastructure, technology, capability-building and talent development, of which ~Rs 240 crore is committed where projects are under execution. Going ahead, Syngene’s revenue mix is expected to showcase visible shift towards development and manufacturing business, with manufacturing starting to play a more prominent role. Syngene's management has guided for high teen constant currency growth for FY24 on the back of strong order book and increased set-up across discovery and development.
We believe Syngene remains a compelling play in the CRO space with elite client profile and is well positioned for sustainable growth.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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