Buy Syngene International; target of Rs 635: ICICI Direct

ICICI Direct's research report on Syngene International

Q2FY21 revenues grew 11.9% YoY to ~Rs 520 crore led by growth in Discovery Services and strong traction in dedicated R&D centres. EBITDA margins remained flat YoY at 30% with better gross margins due to a change in product mix being offset by higher employee expenses owing to recruitment for new facilities. EBITDA grew 11.9% YoY to Rs 156 crore. Adjusted net profit (ex-exceptional insurance gain in Q2FY20) grew 2.6% YoY to Rs 84 crore. Delta vis-a-vis EBITDA was due to higher depreciation and lower other income partially offset by lower tax outgo.

Outlook

We remain positive on the company despite the recent run up in the stock and arrive at a target price of Rs 635 based on ~38x FY23 EPS of Rs 16.7.

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