Syngene International Cuts FY24 Growth Guidance To Mid-Teens From High-Teens

Shares of Syngene International Ltd. fell on Wednesday, a day after its second quarter results, as the company cut its revenue growth guidance from high-teens to mid-teens on a constant currency basis.

However, it has maintained its 30% Ebitda margin guidance for the current fiscal.

The guidance cut is on the back of "the temporary slowdown in U.S. biotech funding", which is related to the company's contract research services arm.

The biggest impact of this slowdown in growth will be in the third quarter exports, Chief Executive Officer Jonathan Hunt told BQ Prime. They expect their "fourth quarter to be the biggest fourth quarter ever", he said.

The company is expecting a lot of (export) deliveries in the fourth quarter from the manufacturing and development side of business, Hunt said.

• Revenue up 19% at Rs 910 crore versus Rs 768 crore, as against an estimate of Rs 916 crore.

• Net profit up 14% at Rs 117 crore versus Rs 102 crore, as compared with an estimate of Rs 124 crore (this includes Rs 7.4 crore one-time expense towards Stelis Pharma’s multimodal facility acquisition).

• Ebitda up 16% at Rs 272 crore versus Rs 235 crore. Analysts had forecast it at Rs 272 crore.

• Margin at 29.9% versus 30.6%, as against an estimate of 29.7%.

In terms of the softness in research services, he said that the private equity, venture-capital backed startups is where there is a slowdown in U.S. biotech funds. "The rest of the industry's demand is looking pretty healthy." He however, did not commit on the expected timeline for this effect to reverse, but said that he does not see it as a structural change.

Syngene is also emerging as the leader in the animal health industry, he said.

In terms of the Stelis acquisition, he said that they intend to upgrade and have it ready for operation in the next financial year.

The quarter saw an all-round performance across both of their segments—contract research services, and contract manufacturing and development services, he said.

Shares of the company fell as much as 8.36% before closing 6.63% lower at Rs 727.35 apiece on Oct. 18, as compared to a 0.83% fall in the benchmark Sensex.