Syngene International Gets 'Buy' Call For 24% Potential Upside, Recommended By ICICI Securities

ICICI Securities has recently published a report on Syngene International Limited with a 'buy' for a target price of Rs 710 apiece. The brokerage sees a potential 24 per cent gain. Syngene is contract research, development and manufacturing organisation catering mainly to global innovator pharma\chemical companies offering integrated scientific services from early discovery to commercial supply. Syngene serves these players, which outsource some or a substantial part of their business in the product development life cycle and operates via full-time equipment (FTE) and fee for services (FFS) models. It is a mid-cap Pharma Research company with a market capitalization of Rs 22,988 crore.

Stock Outlook & Returns

The current market price of Syngene International stock after closing on Friday is Rs 572.65 apiece, it was opened at Rs 601 apiece, while the previous close was Rs 598.90 apiece. On Friday, its share price declined 4.69 per cent from its previous close.

The shares of the company hit the 52-week low level on May 26, 2022, at Rs 510.05 apiece, and the 52-week high level on September 15, 2021, at Rs 686.30 apiece. Currently, the share of the company is trading at Rs 62.6 above the 52-week low levels.

The stocks of the company, last wee gave a negative return of 6.61 per cent. However, in the past 1 month, its share has gained 2.98 per cent. In the past 1 year, the shares declined by nearly 8.77 per cent. Whereas in the past 3 years it has given a positive return of 75.26 per cent and multibagger returns of 136.98 per cent past 5 years.

The stocks of the company have a huge potential to gain 24% in the 12 months if we consider the estimated target price of Rs 710 apiece by the brokerage and the Current market price of the stock.

Q1FY23 Results

Remdesivir base in Q1FY22 reflects in muted YoY numbers.

• Revenues grew 8% YoY to Rs 644 crore [Ex-Remdesivir: up 30% YoY].
• EBITDA margins de-grew 94 bps YoY to 26.8%, EBITDA was at Rs 173 crore.
• Net profit was at Rs 74 crore (down 4% YoY).

ICICI Securities suggest buy for target price of Rs 710 apiece

Syngene's share price grew ~2x over past three years. Maintain BUY as the recent Zoetis agreement provides vindication in Syngene's capabilities which could be an inflection point to evolve from clinical scale to commercial scale manufacturing for innovators. We value Syngene at Rs 710 i.e. 25x FY24E EV/EBITDA.

 

 

Key triggers for future price performance

Regulatory approvals from regulated markets for Mangalore facility (FY24) and Librela manufacturing for Zoetis (H2FY23). Multiple year extension of Amgen, BMS, Baxter contracts makes it well poised to capitalise on growing opportunities globally. SynVent, Syngene's Integrated Drug Discovery (IDD) platform ability to expand business from existing clients and attract new clients. Expansion of Biopharma manufacturing business by commissioning cGMP microbial facility and expanding the mammalian cell manufacturing facility.

About - Syngene International Limited

Syngene is an integrated research, development and manufacturing organisation providing scientific services - from early discovery to commercial supply. The company offers services in a wide range of industrial sectors, including pharmaceutical, biotechnology, nutrition, animal health, consumer goods and speciality chemical companies. The company has a highly qualified team of 5,000 employees and is supported by state-of-the-art infrastructure and market-leading technology. The company offer clients a customised end-to-end solution to fulfil their R&D and manufacturing requirements. This is underpinned by a well-established safety framework, track record of quality and compliance, robust supply chain and access to skilled scientists.

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.