Revenue Will Grow In High Teens In FY24: Syngene CEO

What are the factors that have contributed to strong Q4 performance which has also lifted the annual performance of the company?

It was the strongest quarter ever led by the combination of the trends that we saw during the year—good progress in research services, discovery services and dedicated centres, improved operating performance in our development business and strong uptick in manufacturing services. The manufacturing services business uptick was led by the biologics we started to manufacture, supporting our partnership with Zoetis, following a successful regulatory inspection of our facilities by the US, European and the UK regulatory authorities. For discovery services, the pickup in business post-covid is leading to growth. We are trying to catch up for lost ground in the pandemic years. Continued uplift in demand for chemistry led to the growth in discovery services. Our research facility in Hyderabad expanded further in the fourth quarter and now accommodates 900 scientists.

What has been the impact of the recessionary environment by the pharma business, especially contract manufacturing and research services?

The customers are cautious on how to spend their money and where to spend it. Being based in India, our operating costs are lower, and our scientific capabilities are strong. So that is helping the business. I am seeing some good demand and Syngene is well positioned to benefit. I am optimistic for the year ahead.

How much growth are you targeting for FY24? Is the operating performance growth sustainable?

We expect our revenue growth for FY24 to be in high-teens on constant currency basis. I am expecting to sustain the strong operating Ebitda of 29.3% that was reported in FY23, or may even improve upon it to 30%. It’s a combination of things that is helping operating performance. Good cost controls, smart operating efficiencies we have achieved by investing in capabilities over the years. Overall investments in inventories are also coming down. We are deliberately reducing them from high levels of the pandemic. Over the last seven years, revenues have almost quadrupled, market cap has tripled, and we have created thousands of new scientific jobs. We can continue this growth trajectory over many years. According to out annual guidance, we expect to continue the momentum over years via better execution.

What’s the capex guidance for FY24?

We increased capex plans to $100 million for FY24, out of which $30 million is roll over from FY23. Half of the $100 million will go to our research services business, discovery services and dedicated centres. Besides, 20% will go to the biologics manufacturing, 10% to development services and the remaining to other aspects of the business, including digitization and automation across the company.