Syngene International Limited — Q1 FY26 earnings call

Call held 24 Jul 2025

Management summary

Syngene delivered a positive start to FY26, characterized by strong momentum in Research Services and significant margin expansion. The company successfully operationalized its Unit 3 biologics facility and inaugurated a new peptide laboratory to capture high-growth modalities like GLP-1s. Despite continued uncertainty in global biotech funding, management remains confident in its full-year outlook, supported by a healthy pipeline from large and mid-sized pharma companies.

Highlights

  • Reported revenue from operations reached ₹875 crores, an 11% YoY increase (7% in constant currency).

  • Operating EBITDA grew 21% YoY to ₹206 crores, with margins expanding 200bps to 24%.

  • Profit After Tax (before exceptional items) rose 59% YoY to ₹87 crores, aided by a one-time tax adjustment.

  • Research Services performed strongly, accounting for 67% of total sales during the quarter.

  • Unit 3 biologics facility in Bengaluru became operational and delivered its first GMP clinical batch.

  • Raw material costs improved significantly to 25% of revenue compared to 30% in the previous year.

  • Management reiterated full-year guidance of mid-single digit reported revenue growth and early teens underlying growth.

Concerns

  • Biotech Funding Uncertainty

Key financials

  1. Revenue from Operations ₹875 Cr +11%YoY
  2. Operating EBITDA ₹206 Cr +21%YoY
  3. EBITDA Margin 24%
  4. PAT (before exceptional) ₹87 Cr +59%YoY
  5. Net Cash ₹1,053 Cr

What they filed

Q1 FY27: revenue down 15.8%, net profit down 110.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue891 944 1,018 875 911 +2%917 −3%1,037 +2%736 −16%
EBITDA245 284 344 206 200 −19%209 −26%303 −12%91 −56%
Net profit106 131 183 87 67 −37%15 −89%148 −19%-9 −110%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Research Services
    67% Revenue Mix
  • CDMO
    33% Revenue Mix

Guidance & targets

Revenue

  • Reported Revenue Growth Revenue · FY26 · High confidence mid-single digits
    On a reported basis, we guided for growth in the mid-single digits. Based on the Q1 progress, we are on track to hit the guidance as we provided in the last quarter.

    — Deepak Jain, CFO

  • Underlying Revenue Growth Revenue · FY26 · High confidence early teens
    Adjusting for client inventory rebalancing in our Biologics commercial manufacturing business, we guided for an underlying revenue growth to be in early teens.

    — Deepak Jain, CFO

Margin

  • EBITDA Margin Margin · FY26 · Medium confidence mid-20s
    we expect EBITDA margins to be in the mid-20s for the full year and a degrowth impact due to increased depreciation with the facilities coming online

    — Deepak Jain, CFO

Other

  • Raw Material Cost as % of Revenue Other · FY26 · High confidence 26%
    We expect the full year raw material cost to be around 26%.

    — Deepak Jain, CFO

  • Effective Tax Rate Other · FY26 · High confidence 24%
    We expect the effective tax rate for the full year to be around 24%.

    — Deepak Jain, CFO

Capacity

  • Bayview Biologics Operationalization Capacity · H2 FY26 · High confidence Operational
    we expect to operationalize the site in the second half of this fiscal year.

    — Peter Bains, MD & CEO

Risks & concerns

  • Biotech Funding Uncertainty

    high

    Biotech funding has not yet stabilized or returned to pre-pandemic levels, impacting early-stage discovery demand.

    Management acknowledged

  • Inventory Rebalancing in Biologics

    medium

    Expected inventory adjustments in commercial manufacturing will weigh on reported revenue growth for the full year.

    Management acknowledged

  • Senior Level Attrition

    medium

    Analyst raised concerns over historical senior attrition; management countered that the company remains stable with long-tenured leaders.

    Analyst downplayed

Areas of evasion (2)

  • Specific quantitative utilization numbers for Mangalore and Unit 3 facilities.
  • Exact timelines for dedicated center contract renewals.

Q&A highlights

2 direct
Guidance Conservatism vs Q1 Performance Direct
We're 12 weeks into the year, and I think it's just too early for us to make adjustments at this stage... We want to see more visibility through the year.

Management is being cautious despite an 11% growth start, citing upcoming inventory adjustments in the Biologics segment.

Asked by Kunal Dhamesha, Macquarie

CRO vs CDMO Revenue Mix Direct
we started breaking down our CRO and CDMO businesses... 67% mix in the CRO business this year... driven by the growth that Peter highlighted around pilot projects.

This provides new granularity on business segments, showing Research Services (CRO) is currently the primary growth engine.

Asked by Shyam Srinivasan, Goldman Sachs

Biotech Funding Environment and Pilot Conversions Partial
Biotech funding... represent one of the inputs into our discovery services... there was a significant reduction in US funding into biotech that created a sort of sector-wide drawback.

Confirms that while Syngene is seeing healthy conversions, the broader macro environment for smaller biotech clients remains constrained.

Asked by Alankar Garude, Kotak Institutional Equities

2 min read 5 chapters

Detailed narrative

Research Services Leads Growth Momentum

Research Services was the standout performer in Q1, contributing 67% of total revenue. This growth was driven by the successful transition of pilot programs into longer-term contracts and increased demand from large and mid-sized pharma. Management highlighted that despite the biotech funding crunch, the segment's 11% growth demonstrates resilience and a diversified client base.

Operational Milestones in Biologics and Peptides

A major milestone was achieved with Unit 3 in Bengaluru becoming operational and delivering its first GMP clinical batch for a US client. Additionally, the company inaugurated a state-of-the-art peptide laboratory to target the rapidly emerging GLP-1 class for diabetes and obesity. These investments are expected to drive medium-term growth as utilization ramps up over a 3-to-5-year horizon.

Margin Expansion Through Cost Efficiency

Operating EBITDA margins expanded to 24% from 22% YoY, primarily due to a favorable business mix and improved raw material yields. Raw material costs dropped to 25% of revenue this quarter, though management expects this to normalize to 26% for the full year. Automation in DMPK operations has already reduced turnaround times from 5 days to 3 days, enhancing cost efficiency by 30%.

Strategic Expansion in the US Market

Syngene is making steady progress at its Bayview Biologics facility in the US, with revalidation and integration efforts on track for operationalization in H2 FY26. The facility's versatility, featuring three discrete suites, has already garnered healthy interest from potential customers. This site provides a critical local footprint to mitigate geopolitical risks and capture US-based demand.

Leadership Strengthening and Sustainability Focus

The company bolstered its leadership team with three key appointments: Dr. Priyaranjan Pattanaik (Discovery Biology), Gaurav Kushwaha (CTO), and Ajay Tandon (Head of Corporate Development). These hires are aimed at driving AI-led digital transformation and strategic growth. Furthermore, Syngene was recognized by Time Magazine as the most sustainable pharma/biotech company in India.

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