Mehabe score: 5 G Factor: 0 Piotski Score: 7 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 0 and Piotski score of 7.
Description
Syngene (established in 1993) as a Biocon subsidiary is India’s first Contract Research Organization (CRO) which expanded later to be an integrated service provider offering end-to-end drug discovery, development, and manufacturing services on a single platform (CRAMS). Total research & manufacturing infrastructure for the company is spread across 1.9 million square feet across locations.
Main Points
Business Footprint:
The company caters to diverse end-user industries like Pharmaceuticals, Animal Health, Agrochemicals, Consumer Packaged Goods, Chemicals/Polymers.
It has 360+ active customers with engagements with 8 out of the top 10 global pharma companies. The company holds 400+ patents jointly with clients and has a base of 4200+ scientists.Site:SYNGENEMain Symbol:SYNGENE
Stock trades at 651.0, above its 50dma 591.86. It also trades above its 200dma 555.68. The stock remains bullish on techicals
The 52 week high is at 700.00 and the 52week low is at 407.65
Price Chart
P/E Chart
Sales and Margin
Strengths
– ‘s median sales growth is 22.93% of last 10 years
Weakness
– Stock is trading at 9.26 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-Tax rate seems low
-Dividend payout has been low at 1.01% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 31.5x. Syngene Intl. trades at the industry’s max P/E of 68.98x. SYNGENE trades at a P/E of 69.0x
– Industry’s mean G-Factor is 1.9 while the mean Piotski score is 9.0. SYNGENE has a G-Factor of 0 and Piotski scoreof 7.
– Average 1 month return for industry is 1.1%. The max 1- month return was given by Syngene Intl.: a return of 11.62 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 658.0 cr compared to Rs 607.0 cr for period ended Mar 2020, a rise of 8.4%
Operating Profits reported at Rs 215.0 cr for period ended Mar 2021 vis-vis 204.0 for period ended Mar 2020 .
Operating Margins contracted -93.3 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 4.01 compared to Rs 2.54 for previous quarter ended Dec 2020 and Rs 3.0 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2179.0 cr for period ended Mar 2021 vis-vis sales of Rs 2012.0 cr for the period ended Mar 2020, a growth of 7.7%. The 3 year sales cagr stood at 15.3%.
Net Profit reported at Rs 404.0 cr for period ended Mar 2021 vis-vis sales of Rs 412.0 cr for the period ended Mar 2020, falling 2.0%.
Company recorded a Net Profit CAGR of 9.8% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 698.0 cr for period ended Mar 2021 vis-vis Rs 677.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 15.0% compared to 17.0% over the last 3 Years. – The stock has given a return of 54% on a 1 Year basis vis-vis a return of 30% over the last 3 Years. – The compounded sales growth on a TTM bassis is 8% vis-vis a compounded sales growth of 15% over the last 3 Years. – The compounded profit growth on a TTM basis is 6% vis-vis a compounded profit growth of 9% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 14.42% vis-vis 14.25% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 9.49% vis-vis 9.19% for Mar 2021
Conclusion
– ‘s median sales growth is 22.93% of last 10 years – Stock is trading at 9.26 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-Tax rate seems low
-Dividend payout has been low at 1.01% of profits over last 3 years
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 591.86 and is trading at 651.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
