Syngene International shares hit record high after Q1 results; co on track to achieve FY24 guidance

Shares of pharma R&D company Syngene International, a subsidiary of Biocon, rallied 6.26 percent and hit an all-time high at Rs 813 in Thursday's trade on NSE after the company posted a net profit of Rs 93.4 crore in the June quarter, higher by 26.4 percent when compared with Rs 74 crore in the last-year period.

Speaking to CNBC-TV18 on Thursday, Jonathan Hunt, the MD and CEO of Syngene International said the company is on track to achieve its FY24 guidance. "26 percent topline growth with currency, 19 percent growth on a constant currency basis. So, 7 percent of the topline came from the currency impact. We have seen quite a lot of movement between the rupee and the dollar over the last year or so – that is why we gave guidance for the full year on a constant currency basis. We said high teens came in at 19 percent for the quarter, so we are absolutely on track,” he said.

Hunt also said that the company expect biologics to take off in the next 18 months. “The whole deal is funded out of the cash reserves; we are perfectly capable of self-funding.”

“We have seen that biologics really take off over the last 18 months to the point where we were starting to bump our head against a capacity ceiling. And I took the decision to bring forward what would have been an organic build out, building our own biologics plant and we saw a very good opportunity with Stelis, they had a plant that was no longer fitting what they needed.”

Hunt added that Syngene currently has 450 active clients. “We don't break it out by individual client, individual project, but 450 active clients in any given time, I have got hundreds of beyond that at individual projects, it wouldn't be right to break it out.”

“First quarter performance was strong, led by development and manufacturing services and well supported by our research divisions: discovery services and the dedicated centers," Hunt said.

The first quarter revenue from operations rose 26 percent YoY to Rs. 832 crore. The earnings before interest, tax, depreciation and ammortisation (EBITDA) rose 25 percent YoY to Rs 235 crore in Q1FY24. The EBITDA margin dropped 20 basis points to 28.3 percent.

Of the nine analysts tracking Syngene, eight maintain a 'buy' rating, and one suggests a 'sell', according to data from Bloomberg. The average 12-month consensus price target suggests a potential downside of 8.5 percent.