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Dolat Capital Report
Syngene International Ltd. reported a 16% beat on earnings in Q2, adjusting for forex gain and one-off reversal of export incentive receivables of Rs 307 million, despite an in-line revenue growth aided by lower tax rates.
Higher inventory stocking continue to impact Ebitda margins in Q2 as well. Margins came in at 27.4% versus our estimate of 26%.
Syngene had procured higher inventory in last couple of quarters in-order to mitigate the logistical challenges. This coupled with higher contribution of Remdesivir (lower gross margin product) impacted margins at ~26% for H1 versus normal run-rate of 30-31%.
In H1 FY22, company reported top-line growth of 35% YoY, driven by high contribution of Remdesivir (base revenue growth was in mid-teens). Our back of the envelope calculation suggests, Remdesivir contributed ~Rs 1.8-2 billion in H1.
Management highlighted business normalisation in U.S. and EU and traction in complex projects such as peptide synthesis, PROTACS, etc. and remains confident of its growth trajectory in the medium term.
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