Syngene Q2 Results Review - Play On Growth Catch Up; Raise To 'Buy': Yes Securities

Yes Securities Report

Syngene International Ltd. built upon weak base of Q1 and highlighted positive signs of recovery in Discovery Services. These were largely driven by pilot projects with large and mid-sized pharma customers looking for alternatives to China to de-risk their supply chains.

Biologics manufacturing does its bit amidst a robust back drop as alluded by other global, and much larger, peers. Management indicated a strong Q3 is underway that would provide visibility for H2 as it aims for what is an implied ~20% growth and 34- 35% margin if it has to reach ~9% growth for current fiscal.

We stick to our forecast of strong rebound in FY26 aided by support from acquired facility which would continue in FY27 too.

After two lackluster years where constant currency growth was likely in mid-single digit, we factor in a robust rebound over FY26-27 especially as biologic capacity increases sharply in an environment where global demand is likely to remain strong.

Introduce FY27 forecast and roll over to FY27E EPS with revised target price Rs 1,060 (earlier Rs 900), based on a trimmed 40 times FY27E EPS (versus 45 times earlier on FY26E EPS). Continue to view Syngene as a recovery play with strong growth upsides that would drive rerating potential.

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