ICICI Direct's research report on Syngene International
Syngene is a 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 substantial part of their business in the product development life cycle and operates via full time equipment (FTE) and fee for services (FFS) models • Revenue breakup: Discovery services: FTE engagements with high renewability; Dedicated services: Long-term strategic alliances that last usually five years or more, Development and manufacturing: FFS engagements, which increase in volume/scale over time.
While this bodes well for future, it will also have implications on the margins and return ratios in the short to medium term. Maintain BUY. We value Syngene at Rs 730 i.e. 25x FY24E EV/EBITDA.
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