Concall AI

Syngene International Limited — Q3 FY26 earnings call

Call held 23 Jan 2026

Management summary

Syngene International reported a challenging Q3 FY26 with revenue declining 3% year-on-year and PAT dropping significantly, primarily due to the ongoing impact from a single large molecule biologics customer. However, the nine-month performance showed a 3% revenue growth. The company revised its full-year FY26 revenue guidance to a decline of 3-5% but highlighted steady underlying business growth and strategic investments in capabilities and capacity, including extending its key collaboration with Bristol Myers Squibb until 2035.

Highlights

Nine-month revenue from operations increased 3% year-on-year to Rs.2,702 crores.
Operating EBITDA for the nine-month period was Rs.615 crores, with a margin of 23%.
Extended collaboration with Bristol Myers Squibb through to 2035, providing a 10-year horizon.
Advanced chemistry capabilities expanded at Hyderabad, improving speed, efficiency, and scalability.
New commercial-scale facility for liquid-filled hard gelatin capsules commissioned, enhancing oral solid dosage platform.

Concerns

Q3 revenue from operations declined 3% year-on-year to Rs.917 crores, and 7% in constant currency.
Q3 operating EBITDA margin stood at 23%, down from 30% in the last year.
Profit after tax before exceptional items for Q3 was Rs.73 crores, down 44% year-on-year.
Reported PAT for Q3 was Rs.15 crores, down 89% year-on-year.
Exceptional item of Rs.58 crores net of tax due to change in gratuity liability under new labor codes.
FY26 revenue guidance revised to a decline of 3% to 5% due to ongoing impact from a single large molecule biologics customer.

Key financials

2 periods

Q3

Revenue from Operations
₹917 Cr
YoY -3%
Operating EBITDA
₹209 Cr
Operating EBITDA Margin
23%
PAT (pre-exceptional)
₹73 Cr
YoY -44%
Reported PAT
₹15 Cr
YoY -89%

9M

Revenue from Operations
₹2,702 Cr
YoY +3%
Operating EBITDA
₹615 Cr
Operating EBITDA Margin
23%
PAT (pre-exceptional)
₹227 Cr
YoY -22%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	891	944	1,018	875	911 +2%	917 −3%	1,037 +2%	736 −16%
Expenses	646	660	674	668	711	708	733	645
EBITDA	245	284	344	206	200 −19%	209 −26%	303 −12%	91 −56%
Margin	27%	30%	34%	24%	22%	23%	29%	12%
Other income	17	18	19	18	15	-55	16	12
Interest	13	12	16	12	13	12	12	10
Depreciation	111	109	106	111	117	114	112	112
Profit before tax	137	181	241	101	85 −38%	28 −84%	196 −19%	-19 −119%
Tax rate	23%	27%	24%	14%	21%	47%	25%	-53%
Net profit	106	131	183	87	67 −37%	15 −89%	148 −19%	-9 −110%
EPS	2.64	3.26	4.55	2.15	1.67	0.37	3.67	-0.22

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
66% Share of Revenue
CDMO
33% Share of Revenue

Order book

high confidence

Total value

$500 Mn

as of 2025-12-31 quantified

Execution

10-year program

The company has a significant long-term contract for a single product, which has faced headwinds due to inventory correction and product-specific issues, impacting current performance.

Source: Prepared remarks

Capital allocation

high confidence

Capex $9 Mn this quarter · $45 Mn (FY26) planned
- Research services (DMPK biology, ADC labs, dedicated centers) $4.5 Mn
- CDMO (liquid filled hard gelatin capsules facility, Bayview integration, Unit-3 modification) $3.15 Mn
- Digitization, automation, common infrastructure $1.35 Mn
During the 3rd Quarter, we invested a total CAPEX of around $9 million. Around 50% was invested in research services primarily across capability builds including DMPK biology, ADC labs and contractual obligations in dedicated centres along with regular CAPEX expansion. Nearly 35% of the CAPEX in the CDMO business including for a new commercial scale facility for liquid filled hard gelatin capsules, integration of Bayview facility and the modification of Unit-3. The remaining CAPEX was spent on digitization, automation and towards common infrastructure.
Liquidity Cash ₹902 Cr

We continue to maintain a strong balance sheet. After meeting CAPEX spends for the quarter, we have a net cash balance of Rs.902 crores as of 31st December 2025.

Guidance & targets

Revenue

FY26 Revenue Growth Revenue · FY26 · High confidence decline in the range of 3% to 5%

Previously mid-single-digit top-line growth → decline in the range of 3% to 5%

With the ongoing single product impact in our large molecule business, we are revising our guidance. We expect to close the full year with a decline in revenue in the range of 3% to 5% with operating EBITDA margin in the range of 22% to 23%.

— Deepak Jain

Profitability

FY26 Operating EBITDA Margin Profitability · FY26 · High confidence 22% to 23%

With the ongoing single product impact in our large molecule business, we are revising our guidance. We expect to close the full year with a decline in revenue in the range of 3% to 5% with operating EBITDA margin in the range of 22% to 23%.

— Deepak Jain

Capex

FY26 CAPEX Capex · FY26 · High confidence $45 million

Our CAPEX is estimated to be around $45 million by the end of the year.

— Deepak Jain

Costs

Full Year Raw Material Costs Costs · FY26 · High confidence around 25%

We expect full year raw material costs to be around 25%.

— Deepak Jain

Tax Rate

Effective Tax Rate Tax Rate · Full Year · High confidence 21% to 23%

We expect the effective tax rate for the full year to be around in the range of 21% to 23%.

— Deepak Jain

Business Performance

Underlying Business Growth (excluding single product) Business Performance · Ongoing · Medium confidence high single-digits, low double-digits

If I was to exclude the one-off product, right, that is impacting and giving us the headwinds, the rest of the business is growing in high single-digits, low double-digits in constant currency terms.

— Deepak Jain

Single Product Impact

Duration of Single Product Impact Single Product Impact · Beyond Q4 FY26 · High confidence continue in the coming quarters, and then it will play itself out through the coming quarters, but it will go beyond Q4

Well, we expect the impact to continue in the coming quarters, and then it will play itself out through the coming quarters, but it will go beyond Q4.

— Peter Bains

What to watch in Q4 FY26

Duration and magnitude of single product impact

Next quarter and coming quarters

Current Expected to continue beyond Q4 FY26

Target Signs of stabilization or recovery

Why it matters

This product is the primary driver of the current revenue decline and revised guidance, making its trajectory crucial for overall performance.

Well, we expect the impact to continue in the coming quarters, and then it will play itself out through the coming quarters, but it will go beyond Q4.

Risks & concerns

Ongoing impact from single large molecule biologics product
high

This product's performance is the key variable impacting Q3 results and led to revised FY26 guidance, expected to continue beyond Q4 FY26.

Management acknowledged
Inventory correction and product-specific issues for a key product
high

The specific product (Librela from Zoetis) faced inventory correction and now has public product issues, creating headwinds for Syngene's supply.

Management acknowledged
Exceptional item due to new labor codes
medium

A one-time charge of Rs.58 crores net of tax was incurred due to changes in gratuity liability under new Indian labor codes.

Management acknowledged

Q&A highlights

6 direct

Impact of single biologic product and CRO/CDMO split Direct

Let me deal with the second one first, and that is the split between our research services and CDMO, about two-thirds research services, one-third CDMO in this quarter, that is a slight adjustment reflecting the single product impact that we are having, but that is the balance that we have. Turning to this single biologic product where we have been advising of the impact through this year, obviously, we expect to see this impact continue and play itself out in the next quarters and the coming quarters, and the impact that we are now experiencing is now being included clearly in the full-year guidance.

Clarifies the current business mix and confirms the prolonged impact of the single product on future quarters, which led to guidance revision.

Asked by Kunal Damesha

Underlying business growth excluding single product Direct

If I was to exclude the one-off product, right, that is impacting and giving us the headwinds, the rest of the business is growing in high single-digits, low double-digits in constant currency terms.

Provides insight into the core business performance, indicating healthy growth despite the specific product headwind.

Asked by Shyam Srinivasan

Reason for sharp change in FY26 guidance Direct

there is not much of a change in the way we had our view to the business beyond that one single product. The base business and the underlying growth that we spoke about continues to remain robust. It is more than expected impact that we are getting from the one single large molecule product that is actually having an adverse impact into what we had guided and therefore, needing for us to make that change in guidance.

Explains that the guidance revision is solely due to the larger-than-expected negative impact from the single product, not a deterioration in the broader business.

Asked by Alankar Garude

Traction and operationalization of new facilities (Mangalore, Unit-3, Bayview) Direct

in Mangalore, the small molecules facility, we are seeing capacity utilization increase and translate into growth this quarter... In the Mangalore large molecules, again, we are seeing growth. Capacity utilization is improving... With regard to Bayview, as I said in my opening remarks, the qualification of equipment and the facility is now complete. We are finishing with the team in order to prepare to begin operations in that in the coming quarter or so.

Provides an update on the progress and utilization of key new and expanded facilities, indicating positive traction and nearing operational status for Bayview.

Asked by Alankar Garude

Run rate and issues with the $500 million 10-year contract product Partial

in the first few years, we were able to deliver better off than a typical average... from the beginning of the year, we have been speaking about the fact that we are seeing now an inventory correction. But, more importantly, if you look at the public announcements on the product, it is also talking about a product issue as well. And therefore, we do not know how it is panning out.

Reveals that the single product's underperformance is due to both inventory correction and a product-specific issue, which is a significant headwind.

Asked by Chirag Dagli

Environment for services business and biotech funding Direct

I think, and we touched on this in the last quarter, that there were some signs that the venture capital funding into biotech, which has had a pretty long winter, was beginning to thaw. I think what we see is that trend continuing and I think there are some signals that that is accelerating a little bit and that is obviously an encouraging sign and the Syngene has a strong exposure to biotech companies and that would be welcome if that continues and that will feed into the biotechnology companies and provide further opportunities for Syngene to collaborate to support.

Indicates an improving macro environment for the CRO business due to thawing biotech funding, which could support future growth.

Asked by Chirag Dagli

Mitigation strategy for single product impact Direct

it is very clear that what Syngene is looking to do is to build a wide and diversified business across the platforms, and build more large relationships... We are working to diversify our business, both across our platforms and in terms of building more large relationships, so that exposure to these types of single product events would be minimized.

Outlines the company's strategic response to reduce dependence on single products by diversifying and building broader client relationships.

Asked by Manoj Bahety

Prospects for other large products to compensate for current loss Partial

I think that is very hard to say, and directionally, Pankaj, this product, Deepak described the high level contours of expectation there of this product over 10-years, 50-million per year, and obviously, the early launch success, push those numbers higher, which has meant that, in addressing the challenges there, obviously, the gap that we are faced with is high, and that is the single biggest issue that we are dealing. I cannot comment as to say whether anything else is going to make that all up in one-go.

Highlights the significant challenge of compensating for the large impact of the single product and suggests that full compensation from other products might not be immediate.

Asked by Kunal Randeria

3 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Overview and Guidance Revision

Syngene International reported a challenging third quarter for FY26, with revenue from operations declining 3% year-on-year to Rs.917 crores, and 7% in constant currency. Operating EBITDA for the quarter stood at Rs.209 crores, resulting in a margin of 23%, a decrease from 30% in the previous year. Profit after tax before exceptional items was Rs.73 crores, down 44% year-on-year, while reported PAT was Rs.15 crores, an 89% year-on-year decline. Consequently, the company revised its full-year FY26 revenue guidance to a decline of 3% to 5% and expects an operating EBITDA margin in the range of 22% to 23%.

Impact of Single Biologic Product

The primary factor impacting the Q3 performance and the revised full-year guidance is the ongoing effect related to a single commercial-stage product from the company's largest large molecule biologics customer. This impact, which includes inventory correction and product-specific issues, is expected to continue through the coming quarters and beyond Q4 FY26. Management emphasized that this single product's underperformance is the key variable driving the current financial headwinds.

Underlying Business Resilience and Growth

Despite the challenges posed by the single product, Syngene's underlying business performance, excluding this specific product, has shown steady progress. The research services segment, comprising two-thirds of the business, continues to secure new customers and contracts across chemistry, biology, translational, and clinical research platforms. The CDMO business, which accounts for one-third of revenue, is experiencing increased capacity utilization in both small and large molecules. The rest of the business is growing in high single-digits to low double-digits in constant currency terms.

Strategic Investments and Capacity Expansion

Syngene continues to invest in strengthening its scientific capabilities and manufacturing technologies. In Q3, the company invested approximately $9 million in CAPEX. This included expanding advanced chemistry capabilities at Hyderabad with new catalytic screening and flow chemistry laboratories, and commissioning a new commercial-scale facility for liquid-filled hard gelatin capsules, enhancing its oral solid dosage platform. The Bayview Biologics facility in the US has completed process and equipment validation, with hiring underway to support planned operations.

Extension of Bristol Myers Squibb Collaboration

A significant highlight for the quarter was the extension of the long-standing relationship with Bristol Myers Squibb (BMS). This collaboration, which involves over 700 scientists in Bangalore, has been extended through to 2035. This 10-year extension provides both partners with a strategic horizon to further develop and expand their unique collaboration, underscoring the strength of Syngene's client relationships.

Biotech Funding Environment and CRO Business Outlook

Management noted an improving trend in the biotech funding environment, with venture capital funding showing signs of thawing and accelerating after a prolonged period. This is seen as an encouraging sign for Syngene, given its strong exposure to biotech companies. The company aims to leverage this trend to provide further opportunities for collaboration and support, particularly in its research services business, which is experiencing growth across chemistry, biology, biotherapeutics, and translational and clinical sciences.

Capital Allocation and Liquidity

For the nine-month period, CAPEX is estimated to be around $45 million. The company maintains a strong balance sheet, with a net cash balance of Rs.902 crores as of December 31, 2025, after meeting its CAPEX spends for the quarter. This financial strength supports ongoing investments in capabilities and capacity expansion.

This is an AI-generated summary of a publicly available earnings call transcript.

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