Syngene International Limited

Indraneel Mahanti
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Company Overview
Table of 1. Company Overview
Contents 2. Operating Forecast
2
Valuation

3. Assumptions for Valuation Analysis

2
Company Overview
Company Overview
Company Highlights Valuation & Share Performance

• History: Syngene International Ltd. (henceforth referred to as ‘Syngene’ or ‘the Company’)

scientific services. The Company provides end-to-end services within the Contract Enterprise Value 18090.2 Revenue (FY18e) $968
Market Cap 23,273 EBITDA (FY23e) 923.6
Research Organization (CRO) and a growing range of services within the Contract
P/E* 60.76 EBITDA Margin 30%
Development and Manufacturing Organization (CDMO EV/EBITDA* 32.33 Debt / EV 3.38%
• Valuation: From past one year, InfoBeans share price gave around -4.58% return but from
the last six months stock price has showed momentum and went up by 5.85%, major
Cash 259 Total Debt 789.6

reason can be the increased client demand and expansion of relationship with existing *P/E and EV/EBITDA are based on FY22 for comparison

clients
Share Price Current: Rs 516 High/Low: 539.85 / 515
• Strategy: The company’s strategy is to have of capex investment focused on adding
biologics manufacturing capacity, laboratory space for future expansion of the research
business and capability addition across our service lines
• Ownership: Biocon Ltd is the major shareholder with 70.01 % stake in Syngene
International Ltd

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Revenue Forecast
Operating Forecast
Revenue Forecast

Revenue Drivers

Discovery Services: The focus on driving Integrated Drug Discovery (IDD) projects contributed to the growth trajectory. The Company continued to expand its
research facilities in Bangalore and Hyderabad. As part of the third phase of expansion, capacity for 300 scientists was added in Hyderabad

Dedicated R&D Centers: In FY22, Syngene extended its collaboration with Amgen until the 2026. The scope of services was also expanded to cover integrated drug
discovery and development solutions. Syngene will build and operate a dedicated laboratory, which will enable R&D project acceleration

Development Services: The division’s core strength is its ability to provide integrated CMC (chemical manufacture control )services in conjunction with nearly three
decades of experience and expertise in solving scientific complexity enables the division to deliver value to clients. Digitization via electronic laboratory notebook (ELN)
is complete across the division, thus establishing accurate data traceability.

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Valuation
Valuation Analysis
Category Assumptions Comments
2022 2023-2027E

Revenue 18.15% 15.88% • Since the revenue generation is based on the number of clients, so revenue per client is taken for analysis

EBITDA 27.75% 30% • As per the recent earnings call Q2, 2022-23, main objective is to maintain the EBITDA at around 30 %

CAPEX - $100 million • As per the recent earnings call Q2, 2022-23, 100 million dollars capex has been systematically infused into the company

Tax Expense 17.38% 21-25% • As per the recent earnings call Q2, 2022, tax rate will be gradually increased from 21 to 25% over the next five years

Raw material
cost 29.6% 26-27% • As per the annual report, 2022, The raw material cost in the business should be in the range of 26% to 27%

Employee
Benefit
expense
8.77 9% • As per the annual report, 2022,the year-on-year increase of 9% is in line with the increase in the staff strength

Secured
- -
• The Company had entered into external commercial borrowing agreement dated 21 September 2020 to borrow USD 50
million (Rs. 3,796) term loan facility. The Company has entered into foreign currency term loan agreement dated 30
Borrowings March 2021 to borrow USD 20 million (Rs. 1,519) term loan facility.

Unsecured - - • The Company has obtained foreign currency denominated short term unsecured pre-shipment credit loans of Rs.
Borrowings • 2,581 (USD 34 million)

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WACC & BETA

8
DCF

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Relative Valuation
Comparable Company Rationale

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Dupont Analysis

Dupont Analysis
30.00% 2.00
1.80
25.00% 1.60
20.00% 1.40
1.20
15.00% 1.00
0.80
10.00% 0.60
5.00% 0.40
0.20
0.00% 0.00
Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Mar-26 Mar-27

Net Profit Margin (Net Income/Sales) Return on Equity