Syngene International Ltd Q4 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kunal Dhamesha - Macquarie Capital Securities (India) Pvt. Ltd. - Analyst : Hi, thank you for the opportunity. The first question on the top line growth, so we have been suggesting that we have seen a good momentum in terms of the new RFPs, and we have converted majority of these, no new projects into a long term agreement. But then it's not reflecting, at least in our guidance, right, so are these very long gestation period projects. Wherein they will have an impact maybe a couple of years down the line. How should we think about it? And then given that biotech funding has not recovered too much, at least in 2025 year it's still down. Is it that the number of RFP in the market has kind of reduced though we are seeing growth over what we are used to see, so basically time has reduced, but we are seeing more traction. How to think about all these variables, let's say for the next couple of years.

Question: Kunal Dhamesha - Macquarie Capital Securities (India) Pvt. Ltd. - Analyst : Yes, it broadly answers my question. Just to follow up on the EBITDA margin guidance, I understand that that there'll be operating costs related to the new plant, unit 3 as well as the US based plant, and until the time they ramp up this thing will continue, but it is also a function of lower potential, lower biologics revenue given the inventory normalization that we are expecting next year.

Question: Kunal Dhamesha - Macquarie Capital Securities (India) Pvt. Ltd. - Analyst : And, just a last follow up from my side if I may, how long should we kind of think about this, operating drag continue is it till the time that these facilities undergo regulatory approvals, once we get USFDA or EMA approval or, we should start seeing, the operating leverage kicking in who should be what are the timeline or the milestone we should look at.

Question: Kunal Dhamesha - Macquarie Capital Securities (India) Pvt. Ltd. - Analyst : Sure. Thank you and all the best. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 5:30AM, SYNN.NS - Q4 2025 Syngene International Ltd Earnings Call

Question: Chirag Dagli - DSP Mutual Fund - Analyst : Yes, sir, thank you for the opportunity. Sir, as you, you've given some color around FY26. So FY27, given whatever we've seen and the constant CapEx that we are continuing to do, and we do more of that in FY26 as well, can you give us some sense of how different FY27 should be, or beyond FY26 should be versus, the last three, four years where growth has not been great and we've constantly, sort of invested in the business.

Question: Chirag Dagli - DSP Mutual Fund - Analyst : So if I just to kind of get a little more clarity around this mid-teens, if I take the FY24 base, and grow it by mid-teens, over the next three years is how we should think about sustainable growth over the next few years for that normalizes the inventory build up and so on and so forth.

Question: Chirag Dagli - DSP Mutual Fund - Analyst : Understood. This is helpful. Just the last bit, if I can, in terms of the, in terms of unit 3, do we have firm orders, on utilization of unit 3 Just how should we think about the scale up to the next four quarters as far as unit 3 is concerned as it comes on stream in the first quarter.

Question: Chirag Dagli - DSP Mutual Fund - Analyst : Okay, sir, thank you so much.

Question: Shyam Srinivasan - Goldman Sachs - Analyst : Yeah, good morning. Thank you for taking my question. Just the first one is on the CRO, the research services bit, I think you called it out at 61% of revenues. Last time I saw the fact sheet, it was last year was 60%. So maybe you could just, clarify those numbers as just a data point, but just double clicking into this, just want to know how dedicated centers have done and what is that salience in terms of percentage. And the non-dedicated part or the rest of the CRO business, how has that trended for fiscal '25?

Question: Shyam Srinivasan - Goldman Sachs - Analyst : Yeah, Deepak. The issue is dedicated and just keep growing. We have grown totally CRO at 2%, which means the rest of the business actually declined. I don't know. I'm just trying to guess, right, looking out.

Question: Shyam Srinivasan - Goldman Sachs - Analyst : So since you're not telling me exactly, the second of growth for the non dedicated, could it be a double digit number? I'm trying to imply it, because I can't see it in the numbers.

Question: Shyam Srinivasan - Goldman Sachs - Analyst : Very helpful, Peter. My second question is just on the small molecule bit, right? Salience has come down from 16% to 12% if I get the numbers right. So there's about USD150 million, I think right now at small molecule CDMO declined 24%. So when I think the opening remarks talked about a positive outlook as we ended the year. I just wanted to get some, details around that. And the 24% decline was attributed to setbacks in clinical programs. I get it, but there was also lower demand, so if you could just double click on that, please. Thank you.

Question: Shyam Srinivasan - Goldman Sachs - Analyst : Great thank you. And last data point, a number of scientists that we have, end of the year fiscal '25, and how is that mood over the year and if you could give us, have you seen any net additions if I can use the word in terms of scientists. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 5:30AM, SYNN.NS - Q4 2025 Syngene International Ltd Earnings Call

Question: Shyam Srinivasan - Goldman Sachs - Analyst : Peter, last question, attrition is equal to additions, is it? Is that why that's how it is?

Question: Shyam Srinivasan - Goldman Sachs - Analyst : Thank you and all the best.

Question: Madhav Marda - Fidelity International - Analyst : Hi, good morning. Thank you for your time. I wanted to understand, if I look at Syngene's margins over the last, let's say five years or six years, adjusted for the forex volatility, which happens, which is not in your control anyway. Our base margins are somewhere in the 29% to 30% EBITDA margin range. FY26, I guess I completely understand we have the new facilities coming in which is impacting, we have the initial Opex. What I wanted to understand is if you think three, four years out once these, new facilities hopefully ramp up and research services businesses has its steady growth, do the margins come back to the historical, project engineers maintained over a long period of time? Should we go back to the 29%, 30% range in a three, four year view is my question.

Question: Madhav Marda - Fidelity International - Analyst : Also, if I got the pecking order right, Biologics is amongst the higher margin businesses for us, more molecules is a bit lower, and for research services it depends on the kind of projects that we do. Is that the right way to think about it?

Question: Madhav Marda - Fidelity International - Analyst : Understood. And on the, ramp up timeline for the unit 3 and the Baltimore facility, if I understand that the guidance that you've given so far is that over a three to five year period. We should expect to ramp it up to one time fixed asset term, is that right? Did I get that right?

Question: Madhav Marda - Fidelity International - Analyst : And is that the peak utilization of these kind of facilities usually?

Question: Kunal Dhamesha - Macquarie Capital Securities (India) Pvt. Ltd. - Analyst : Got it, thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 5:30AM, SYNN.NS - Q4 2025 Syngene International Ltd Earnings Call

Question: Damayanti Kerai - HSBC - Analyst : Hi, thank you for the opportunity. Again, coming back to the facility. I just want to understand, this Baltimore facility, apart from providing you a footprint in the US market, how different this will be from the unit 3 facilities because if I understand correctly, both are, Biologic CDMOs. So how different is Baltimore facility compared to your unit 3, and, second part of the question is, do you already have some visibility on the project pipeline for Baltimore unit?

Question: Damayanti Kerai - HSBC - Analyst : Sure, that's helpful. Deepak, if you can explain what has happened to this inventory correction level at clients because that's something, you have repeatedly mentioned, and it's not very clear. So if you can bit elaborate what has happened and then, I think your guidance, etc. Is based on, adjusting for that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 5:30AM, SYNN.NS - Q4 2025 Syngene International Ltd Earnings Call

Question: Damayanti Kerai - HSBC - Analyst : Got it. That's clear. Thank you, Deepak.

Question: Chintan Shah - JM Financial Ltd - Analyst : Hi, thank you so much for the opportunity. I just had one question. So, we've been reading a lot about that generative AI is a lot of initiatives been taking place, especially focusing on discovery part and the development pipeline whether everyone talks, at least there has been news that they want to reduce the timings, etc. So putting that in context, I just wanted to get your thoughts basically how do you see this is because since CRO is a very big part of our business, is this a big risk for us, or do you think there is an opportunity and how are we, preparing ourselves for this? That's my question. Thank you.

Question: Chintan Shah - JM Financial Ltd - Analyst : Got it. That well understood. Just one follow up on this. Do we at all, see a risk that that could lead to lower outsourcing of these services? Do you foresee that risk at all because of AI?

Question: Chintan Shah - JM Financial Ltd - Analyst : Got it. Understood. That was very helpful. Thank you so much.

Question: Anandha Padmanabhan - PGIM India Mutual Fund - Analyst : Thank you for taking my question. My question was with regards to the inventory adjustment in the large molecule that you mentioned. So how should we look at it? Is that from FY26 should be here where the supplies will normalize on a steady state basis, and this is something that will continue in the coming years. And, if the a couple of one of the earlier participants question you mentioned that you are expecting the growth on the commercial manufacturing side to continue to accelerate, into in the coming years. So are you building into if I look at '27 or '28, are you expecting that particular molecule per se to accelerate as well, or you expect that at a steady basis and it will be new businesses that will actually or new opportunities in the large molecule that will accelerate the growth?

Question: Anandha Padmanabhan - PGIM India Mutual Fund - Analyst : Okay, the second question from my end, is that, in the recent past couple of one or two years we have seen multiple new lows of a couple of your key clients on the dedicated center side establishing their own captives in India. What is the overlap of activities that, those clients do in the captives is either the activities that they do with Syngene. And do you see any risk that in the future they might actually try to source those activities into their own captives rather than giving it to?

Question: Anandha Padmanabhan - PGIM India Mutual Fund - Analyst : Thank you. That's all from my end. Thank you for answering my questions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 5:30AM, SYNN.NS - Q4 2025 Syngene International Ltd Earnings Call

Question: Tushar Manudhane - Motilal Oswal Financial Services Ltd - Analyst : Yeah, thanks for the opportunity. So just, when I might have missed the numbers, I was just asking that what would be the operational cost for the Biologics facility on an annual basis? And given that we'd have to have compliance in place, so effectively how to think about the increase in the cost for the next two to three years and likewise the US facility.

Question: Tushar Manudhane - Motilal Oswal Financial Services Ltd - Analyst : Got it. So directionally safe to assume that there will be further scale up in this cost maybe in the year two, which is like FY27. Before we pick of achieving EBITDA breaching on.

Question: Tushar Manudhane - Motilal Oswal Financial Services Ltd - Analyst : All right. Thanks. That's it from my side. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 5:30AM, SYNN.NS - Q4 2025 Syngene International Ltd Earnings Call