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Syngene International IPO: Should You Consider Investing?


Syngene International is a arm of Biotech company Biocon Ltd and has opened for subscription from 27 July, 2015. Syngene is one of the leading India-based contract research organisations (CRO).

The company was incorporated as Syngene International Private Limited on November 18, 1993 at Bengaluru, Karnataka as a private limited company under the Companies Act, 1956.

Also read: 7 Things to Know About e-IPO or e-Initial Public Offering

Syngene International IPO: Should You Consider Investing?

The primary objects of the Offer is to achieve the benefits of listing of our Equity Shares and carry out the divestment of Equity Shares by the Promoter.

Check the recent IPO listing

Syngene International IPO details

Issue Opens 27 July, 2015- 29 July 2015
Issue Type 100% Book Built Issue IPO
Issue Price Rs 240-Rs 250
Issue Size Rs 528 - 550 Crore
Market Lot 60 Shares
Listing At BSE, NSE
Book Running Lead Managers Axis Capital Limited, Credit Suisse Securities (India) Private Limited and Jefferies India Private Limited
Face value Rs 10 Per Equity Share

Risk factors which should be considered

The company is dependence is on a limited number of clients, and a loss of or significant decrease in business from them.

  • The company is depended on the continued outsourcing of R&D by pharmaceutical, biotechnology, agrochemistry, consumer health, animal health and cosmetic industry companies.
  • The company's failure to obtain or retain the various approvals and licenses required to operate our business also failure to effectively develop and market new services.
  • Failure to maintain company's sufficient insurance coverage to cover all possible economic losses and liabilities associated with our business.
  • The company's failure to protect the intellectual property rights of our clients; our exposure to risks associated with fluctuations in foreign exchange rates.
  • The company's outcome on legal proceedings pending against them.
  • Risks arising from changes in interest rates, currency fluctuations and inflation; and general economic and business conditions in India and other countries.

Why you can consider investing in Syngene IPO?

  • The company has good past record of revenue growth in the past five years.
  • The company has provided profit margins between 18-19 per cent in three years.
  • Syngene is a subsidiary of the #mce_temp_url#Biocon Ltd


As there is no similar business listed, hence stating whether share price is high or low will be difficult. One can consider for a long term investment. However, there are many risk factors which make investment in the company a slightly risky proposition.

Now, if we consider the valuation it could be slightly steep. For example, the EPS for the year ending March 2014 was Rs 7.24. At the upper band the price to earnings ratio of almost 35 times. This is rather steep and compares with some of the larger pharma companies, though it cannot be strictly compares with a pharma company. Higher price offers very little comfort.

Investment Advisors

ICICI Direct recommends "subscribe" to Syngene IPO, stating its strong and sustainable business model.

Anand Rathi Securities advised "long term subscribe" on the issue, stating on its consistent performance.

While, Angel Broking recommended "avoid" on the IPO, stating as "no valuation comfort" and focusing on higher concentration of revenue with top 10 clients.

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