ICICI Direct: Syngene International Q1 Reports Steady Numbers Despite Covid-19, Positive Outlook  

ICICI Direct Report

Syngene International Ltd.’s Q1 FY21 revenues remained flat YoY at approximately Rs 422 crore (up 0.2%) led by growth in Discovery Services and steady traction in Dedicated Research and Development segment. A 30.6% QoQ decline in revenues was on account of temporary Covid-19 related shutdown across all segments. Despite higher employee cost and other expenditure, Ebitda margins were up 76 basis points YoY at 29.5% on the back of better gross margins. Subsequently, Ebitda grew 2.8% YoY to Rs 124 crore. Net profit de-grew 19.4% YoY to Rs 58 crore. Delta vis-a-vis Ebitda was mainly due to higher depreciation

Steady Q1 numbers despite Covid-19 related business continuity planning (BCP) challenges, validate the stickiness of the business in a tough environment. We expect revenues to be back on track, going ahead, as the company is currently operating at 90% capacity. The management has guided for double-digit revenue growth on the back of continuous client additions, an extension of existing contracts, increasing manufacturing and biological contributions besides currency tailwinds. Profitability is likely to be muted due to incremental opex and higher depreciation.

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