Interesting read on Companies Business, Expansion Plans and Amazing future prospects and possibilities.
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Read this about a competitor on twitter:
Jeevan Scientific Tech: The CBO of Veeda Chemical who helped it to scale the Clinical business for 200crs and sell it to a private equity player CX partners at 900crs is trying to replicate the same in JST where he is the CEO. There’s more than a chance that as JST scales up,CX will scoop up this co too.
Jeevan’s financials look good too
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In their presentation, they have mentioned these as their asset
- Quality compliance
- Talented workforce
- Latest technology
-
Global supply chain
and others…
Can someone explain what advantage they have in term of the global supply chain & how have they built it as their asset?
Syngene Q2 FY 22 Results Press release
Revenue from operations up 17% to Rs. 6,102 Mn
PAT increased 9% to Rs. 920 Mn
Positive performances in all divisions
Also I have observed that their bottom line has always lagged vs their top line.
Whats the problem, aren’t they doing backward integration or have efficiencies of scale & if so have the management said that they are going to focus on increasing their bottom line more/inline with their top line.
Where is the problem btw?
It is not a problem but business model itself. First do full capex, hire eployees and wait for customers. Once customers start, we see a hockey stick like pattern of profits on graph. Then again repeat the same. You can say some years with less profit growth or even degrowth and some years with high profit growth. Discl Invested.
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Q2 & H1 FY22 Concall Summary
• In the quarterly result there was a one-time impact of Rs.253Million on PAT. This was due to the government providing incentives for companies who are engaged in foreign exports. While from 2016-2019, 5% of the total exports were provided back in form of a rebate from the government while in FY2021 Govt. put a capped of Rs 50 million on the incentives which were realised by syngene, to revert on the guidelines, syngene PAT was impacted with a one-time cost on P&L ( Check the exceptional Items).
• Supply chain disruption has led to some dent in the revenue and cost profile which lead to lower realisations.
• Inventory is high as there was a disruption in supply chain issues and procurement, So to have non-disturbance in operations they stocked well in advance and which led to a dent in a gross Margin impact as some of the raw materials was been purchased at a higher price and some directly impacted the gross margins.
• There was an increase in employee cost of 16% as the salary was raised as per the industry norms.
• 85-90% of the power generation is procured from clean energy i.e. Solar and wind as a captive use while that protect from disruption of power crises.
• Management is very conservative in guidance so still they are waiting for clear visibility and sales pipelines will be guided in Q3FY22.
• Management planned 100 Cr CAPEX for the Mangalore plant in development in the API business
• 18.5% will be effective tax rate for the year FY22
• 750-900 crore CAPEX was planned during the year, while 250 crores is added to further CAPEX from the previous year. While out of that 180 Crores has already been spent on development and 500 crores on execution.
• There is a small dent in a capacity utilisation which will be operative back to normal level in FY22
• Growth in the revenue can be expected between 12-18% for the upcoming 3-5 years
• There is no significant contribution from the Biologics segment on revenue but as per management, there is clear visibility of contribution in the revenue from the upcoming year.
• Revenue Segmentation
1/3rd of revenue is contributed by Discovery Business
1/3rd of revenue is contributed by Development and Manufacturing Business
1/3rd of revenue is contributed by Dedicated R&D Centres
• Mangalore API business will be a ramp-up and can see a significant contribution in revenue by the first half of FY24
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Given the strong tailwinds in the sector 12-18% revenue growth is too low.
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Any particular reason for low growth?
That is what I am trying to understand here if any one from the group can explain the reason for low growth in sector with tailwinds.
Growth has been at similar levels for the last couple of years, in the last 2-3 conference calls management have mostly expressed satisfaction with this growth level. In fact revenue growth in this quarter results was better than previous 2 quarters, but profit suffered due to an exceptional item.
Considering the nature of the business, I see the valuation multiples here not purely as a growth driven parameter but also linked to the future potential of the space and hopefully operating leverage should be a big driver in the future especially once the Mangalore operations come online. Also even though in the Pharma space, but Syngene is a completely different model, with comparatively much lower disruptions versus a Pharma player due to the nature of the business (a bit similar to IT).
Discl : Invested, transactions in last 30 days
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Yes, you are right about the tailwind’s but syngene management is always conservative in terms of projections and sharing their future growth prospects. As of now we can check with the CAPEX they have planned might be we can ±2-3% growth still I think they are pretty with their growth and moving ahead. Management has always done walk the talk. Growing revenue by more than 20% is not an easy task ( As per my view). Sustainability and longevity matter more rather than growing at a higher run rate and cooling down at the GDP rate. So to conclude it looks a pretty scale for the growth. Still, once API business starts coming on to the track we will get good visibility on further revenue growth
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Does Biocon contribute to Syngene’s revenue, if yes what would be the percentage?
Syngene International Announces Extension of Collaboration with Amgen
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Which are the other Indian listed Players in Biologics and Biosimilars