Shares of Biocon’s contract research and manufacturing services subsidiary Syngene International plunged 10% on April 24 as investors dumped the stock on the back of the company’s weak Q4 earnings and a subdued guidance for FY26.
For the March quarter, the drugmaker’s net profit slipped 3% on year to Rs 183 crore, down from the Rs 189 crore that it had reported in the year ago period.
Syngene also clocked in an 11% revenue growth at Rs 1,018 crore, driven by biologics CDMO and commercial projects and a conversion of pilot projects into full programs. While the topline did witness an uptick, it lagged CNBC-TV18’s estimate of Rs 1,066 crore.
Moreover, the company’s operational performance also weakened in the quarter gone by, further weighing down on sentiment. EBITDA margins for the March quarter came at 33.7%, lower than the last year's 34.5%.It was a spike in employee costs that largely dragged Syngene’s operational performance.
Meanwhile, looking ahead, Syngene expects revenue growth to be in the early teens in FY26, a guidance that left the Street disappointed. “Adjusted for inventory balancing in large molecule commercial manufacturing at client level, the reported revenue growth is likely to be at mid-single digit,” the company’s CEO Peter Bains added.
“Looking at the year ahead, while the wider global market dynamics remain uncertain, we expect the business momentum to continue with pipeline build in both small and large molecules, supported by new pilot programs and conversion of existing pilots in discovery services,” Bains said in an exchange filing.
Analysts were hoping for the company to guide for a 15% revenue growth in FY26, hence, a lower-than-expected guidance on that front left investors sour.
On top of that, the management also guided for a decline in the company’s operational performance in the coming quarters, largely due to the setup of new manufacturing capabilities.
“As we bring the new biologics manufacturing facilities into operations, the additional operating costs and depreciation will impact margins. With this, we expect EBITDA margin to moderate from current levels to the mid-twenties and year-on-year decline in profit after tax,” Deepak Jain, Chief Financial Officer, Syngene International said in an exchange filing.
Rounding these up, it was Syngene’s weak Q4 show, combined with an outlook for weak earnings growth in the coming quarters that prompted investors to flock out of the counter today. Shares of Syngene are also down close to 25% for the year thus far.
