Syngene International IPO note by Way2Wealth

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Syngene International Ltd. is one the leading Contract Research Organisations (CROs) in India. Incorporated in 1993, Syngene is a subsidiary of Biocon Ltd., a global biopharmaceutical company. The company offers suite of integrated, end to end discovery and development services for novel molecular entities across sectors. The company has US FDA approved stateof-the-art manufacturing and research facility at Bengaluru; with 2,122 scientists.

Syngene International Ltd. reported a net profit of Rs 175 crore and total revenues of Rs 871.6 crore in FY15. Of the total revenues in FY15, 36.1% were derived from sale of services with dedicated infrastructure and 63.9% from other contracts (Full-Time Equivalent and Fee-ForService). Of the total revenues from sale of services; 95% were derived from exports and 4.9% domestically.

OBJECTS OF THE ISSUE
The primary objective of the issue of about Rs 550 crores; is to sell 2.20 crore shares by Promoters (Biocon Ltd.) and receive the benefits of listing the equity shares on the stock exchanges, which will enhance the company’s visibility and build a brand image among existing and potential clients. The company will not receive any proceeds of the offer and all the proceeds will go to the Selling Shareholders.

VALUATION AND INVESTMENT ARGUMENT:
"At the offer price bands, the issue is available at P/E of 27.3x – 28.4x its FY15 EPS of ~Rs 8.8. We believe there are great opportunities for CROs from the outsourcing markets and thus increasing their share towards global R&D expenditures. The company’s increasing clientele, expanding capacities as well as capabilities, along with plans for forward integration into commercial manufacturing will enable the company to drive growth by benefiting from the opportunities in future. Hence we recommend SUBSCRIBE to this issue", says Way2Wealth research report.