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 state-of-the-art manufacturing and research facility at Bengaluru; with 2,122 scientists.
Key Investment Arguments
- Increasing clientele
- Forward integration to commercial-scale manufacturing
- Planned capex, building blocks for the future
- Strong balance sheet and consistent earnings track record
Key Risks
- Client concentration risk
- High regulatory risk
- Foreign currency volatility risk
Valuation
At the offer price bands, the issue is available at P/E of 27.3x – 28.4x its FY15 EPS of ~`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, I recommend SUBSCRIBE to this issue.
