Syngene International Ltd Faces Stock Price Decline as FY24 Guidance Cut

Syngene International Ltd Faces Stock Price Decline as FY24 Guidance Cut

VoM News Desk | October 18, 2023 | 12:31 PM IST | Breaking News | Follow on Google News

Syngene International Ltd Faces Stock Price Decline as FY24 Guidance Cut

Syngene International Ltd Faces Stock Price Decline as FY24 Guidance Cut

Investor jitters hit Syngene International Ltd as the company’s stock price tumbled by over 7% in morning trading on Wednesday. This downward trend was prompted by the company’s decision to lower its growth guidance for FY24, a move reflecting the challenges ahead. The stock had experienced a remarkable 40% rise over the past year, and the altered guidance inevitably shook investor confidence.

Altered Growth Outlook

Syngene International Ltd has revised its full-year revenue growth guidance for FY24 to mid-teens on a constant currency basis, as opposed to the previously optimistic high-teen growth forecast. The adjustments are primarily associated with hurdles in the Discovery Sciences segment.

Challenges in the Discovery Sciences Segment

While global demand in Discovery Services remained robust, the US-based biotech segment indicated signs of slowed year-on-year growth. Companies in this sector are adapting to a new funding environment, and this short-term slowdown has influenced Syngene’s latest outlook. The long-term sector fundamentals are still strong, and they anticipate ongoing growth but at a more moderate level in the latter half of the year, according to Jonathan Hunt, Managing Director, and CEO of Syngene International Limited.

Financial Performance Highlights

For the quarter ending September 2023, the company reported a 18.5% year-on-year increase in revenue from operations, reaching ₹910 crores. In constant currency terms, revenue growth was at 15%. Profit after tax (before exceptional items) for the quarter saw a 20% year-on-year rise to ₹122 crores. Exceptional items (net of tax) for FY24 pertained to transaction costs linked to the acquisition of Stelis Biopharma Limited’s multi-modal facility. Net profit after exceptional items increased by 14% year-on-year to ₹117 crore.

Sustained Momentum and Achievements

Syngene’s second quarter and first half of the financial year were underpinned by growth in Development and Manufacturing Services, with significant progress in the Dedicated Centers. The company made strides in its long-term biologics manufacturing partnership with Zoetis within Manufacturing Services. Dedicated Centers played a significant role in growth within research services.

During the September quarter, Syngene achieved several significant strategic goals. These include the agreement to acquire the multi-modal biologics facility from Stelis Biopharma Ltd, the acquisition of a 17-acre land parcel in Genome Valley, Hyderabad, as an extension to the existing research campus, and regulatory approval from the US Food and Drug Administration (US FDA) for the commercial manufacturing facility in Mangalore.

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