New Delhi : Syngene International Ltd reported a 31% rise in net revenue for the fourth quarter from a year ago. Its profit after tax also grew by 21%, taking FY23 net profit growth to 10%. Jonathan Hunt, managing director and chief executive officer, expects to maintain the operating margin trajectory, even improve it. Hunt’s confidence and optimism around its growth prospects is reflected in the planned capex of $100 million for FY24. Edited excerpts.
What are the factors that have contributed to the strong Q4 performance which has also lifted the company’s yearly performance?
This was our strongest quarter ever driven by the trends we saw during the year – good progress in research services, discovery services and dedicated centers, improved operating performance in our development business and strong growth in manufacturing services. The uptick in the Manufacturing Services business was led by biologics we began manufacturing, supported by our partnership with Zoetis, following a successful regulatory inspection of our facilities by US, European and UK regulatory authorities. For search services, the business is poised to pick up growth post-Covid. We are trying to catch up on the ground lost in the years of the pandemic. The continued growth in demand for chemistry led to an increase in search services. Our research facility in Hyderabad further expanded in the fourth quarter and now houses 900 scientists.
How has the slowdown environment impacted the Pharma business, especially contract manufacturing and research services?
Consumers are cautious about how and where to spend their money. Being based in India, our operating costs are low and our scientific capabilities are strong. So it’s helping the business. I’m seeing some good demand and Syngene is well positioned to profit. I am optimistic for the coming year.
How much growth are you targeting for FY24? Is the operational performance increase sustainable?
We expect our revenue growth for FY24 to be in the high-teens on a constant currency basis. I am expecting to maintain the strong operating EBITDA of 29.3% that was reported in FY23, or may even improve to 30%. It’s a combination of those things that’s helping operating performance. Good cost control, smart operational efficiencies we have achieved by investing in capabilities over the years. Overall investment in inventory is also going down. We are intentionally reducing them from epidemic highs. Over the past seven years, revenue has nearly quadrupled, market cap has tripled, and we’ve created thousands of new scientist jobs. We can continue this development path for many more years. As per annual guidance, we expect the momentum to continue for years through improved execution.
What is the capex guidance for FY24?
We increased capex plans for FY24 by $100 million, of which $30 million is a rollover from FY23. Half of the $100 million will go to our research services business, discovery services and dedicated centers. In addition, 20% will go to biologics manufacturing, 10% to development services and the remainder to other aspects of the business, including digitization and automation across the company.
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