Buy Syngene Ltd For Target Rs. 1,020 By Yes Securities Ltd
All eyes on FY26 outlook
Result Synopsis
Syngene yet again cut its guidance, albeit marginally from high single to single digit growth as demand recovery linked to biotech funding was delayed by nearly a quarter. Management expects Q4 to be similar to Q3 though it refrained from providing any colour on FY26 outlook (to be given in Q4 call). Q3 saw traction in discovery services and CDMO led by biologic manufacturing with the former driven by initial pilot projects conversion into full-fledged contracts –a durable driver for FY26 too. We believe FY26 growth trajectory assumes renewed significance after two years of tepid performance as discovery business comes out of the shadow of poor funding environment and manufacturing gets a push from commercialization of acquired biologic asset. In lieu of +2% growth in 9m FY25 and expectation of single digit rise, we cut estimates for FY25 and FY26 thereby resetting the base for FY27. Lower FY25/26/27 estimate by 13-23% but retain BUY based on 45x FY27 PE (earlier 40x) as we tweak target multiple to account for some optimism on growth. Our revised TP stands at Rs1,020 with lack of revenue acceleration in FY26 being key risk to our view.
Result Highlights
* Revenue grew 10.6% YoY vs our expectation of 19.5% YoY
* 9m FY25 revenue leaves a rather improbable 28% growth target in Q4 implying miss on high single digit growth guidance
* Margin at ~30% also below expectation of 32%. 9m FY25 margin at 26.5%
* PAT up 17.6% YoY
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