Q3FY21 Result update - Syngene International - ICICI Direct

Q3FY21 revenues grew 12.6% YoY to ~Rs. 584 crore driven by sustained performance from all divisions. EBITDA margins improved 58 bps YoY to 30.1% with better gross margins due to change in product mix, better procurement and energy efficiency being partly offset by higher employee and other expenditure. EBITDA grew 14.8% YoY to Rs. 176 crore. Net profit grew 11.3% YoY to Rs. 102 crore. Delta vis-a-vis EBITDA was due to higher depreciation and lower other income partially offset by lower tax rate.

Valuation & Outlook

Q3 results were in-line with our estimates on all fronts. The company is currently operating at near normal capacity and is, therefore, back on the growth track. The management has maintained its guidance for double-digit revenue growth on the back of continuous client additions, an extension of existing contracts, increasing manufacturing and biological contributions besides currency tailwinds. Profitability is likely to be muted due to incremental opex and higher depreciation. Syngene remains aggressive on the capex front (~US$503 million already spent, another ~US$47 million to be completed by H1FY22), attributable to order book visibility. Asset turnover from this mega capex will be a significant determinant of improvement in return ratios, going ahead. With elite client additions like Amgen, Zoetis, Herbalife, GSK, etc, and multiple year extension of BMS, Baxter contracts, the company remains well poised to capture opportunities in the global CRO space. We remain positive on the company and maintain BUY despite the recent run up in the stock and arrive at a target price of Rs. 700 (vs. Rs. 635 earlier) based on ~42x FY23 EPS of Rs. 16.7.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Syngene_Q3FY21.pdf

Shares of Syngene International Ltd was last trading in BSE at Rs.584.65 as compared to the previous close of Rs. 609.95. The total number of shares traded during the day was 55009 in over 2813 trades.

The stock hit an intraday high of Rs. 609.05 and intraday low of 581.5. The net turnover during the day was Rs. 32480712.

Source : Equity Bulls

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