Anand Rathi Securities' report on Syngene International

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Incorporated in 1993 and headquartered in Bengaluru, Syngene International Limited is a subsidiary of Biocon Limited (“Biocon”), a global biopharmaceutical enterprise focused on delivering affordable formulations and compounds. Syngene International Ltd is one of the leading Indian-based contract research organization (“CRO”), offering a suite of integrated, end-to-end discovery and development services for novel molecular entities (“NMEs”) across industrial sectors including pharmaceutical, biotechnology, agrochemicals, consumer health, animal health, cosmetic and nutrition companies.

Company’s service offerings also support the development of biosimilar and generic molecules. In the near term, it intends to forward integrate into commercial-scale manufacturing of NMEs. As an experienced CRO with a proven track record of providing quality NME discovery, development and manufacturing services and continued focus on reliability, responsiveness and protection of client’s intellectual property, Syngene is well-positioned to benefit from the expected growth in the CRO industry

The company offers services through flexible business models that are customized to their client’s requirements. During Fiscal 2015, Syngene serviced 221 clients, ranging from multinational corporations to startups, including 8 of the top 10 global pharmaceutical companies by sales for 2014. It has several long-term relationships and multi-year contracts with their clients, including three long-duration multidisciplinary partnerships, each with a dedicated research centre, with three of the world’s leading global healthcare organizations Bristol-Myers Squibb Co. (“BMS”), Abbott Laboratories (Singapore) Pte. Ltd. (“Abbott”) and Baxter International Inc. (“Baxter”).

For the fiscal year ended March 31, 2015, company generated total revenue of Rs. 8,716 million and EBITDA of Rs. 2,928 million and grew at a CAGR of 27.7% and 28.3%, respectively between FY13 and FY15.

Clinigene International Limited, subsidiary of Syngene was amalgamated with effect from April 2014. As of May 31, 2015, Syngene has 2,122 scientists, including 258 PhDs. and 1,665 scientists with a Master’s degree.

Recommendations
"As an experienced CRO, Syngene is well positioned to capitalize on the advantages of its flexible business models that customizes to their client’s
requirements globally. On valuation front company is available in the PE of 27.4x – 28.6 xs at higher price band. EBITDA margins of the company is in the range of 31-33%, PAT margins at 18-20% and currently it is growing at CAGR of 27% for last 3 years which shows consistency. We are positive on the business model of Syngene from the long term perspective and thus recommend ‘Long term subscribe” to the issue", says AnandRathi Securities research report.