Syngene International Share Price Target at Rs 825: Kotak Securities
Kotak Institutional Equities has issued a BUY recommendation for Syngene International, setting a fair value target of Rs 825 per share, a significant upside from its current market price of Rs 633. The report underscores Syngene’s robust prospects in biologics CDMO, the successful conversion of pilot CRO projects into long-term contracts, and strategic investments in advanced therapeutics such as ADCs and oligonucleotides. Despite near-term headwinds from a muted small molecule CDMO segment and an uncertain biotech funding environment, Kotak expects Syngene to deliver a healthy 15% CAGR in both sales and EBITDA over FY2025-28E, positioning the stock as a compelling opportunity for investors seeking growth in the Indian pharmaceutical contract research and manufacturing space.
Syngene’s Investment Thesis: BUY Call from Kotak Institutional Equities
Unwavering Confidence in Growth Trajectory
Kotak Institutional Equities reiterates its BUY stance on Syngene International, citing a fair value of Rs 825 per share. The brokerage highlights Syngene’s strategic pivot towards biologics CDMO and the successful scaling of its discovery services as primary growth levers. Despite a challenging funding landscape for biotech globally, Syngene’s proactive investments and operational recalibration are expected to yield a robust 15% CAGR in both EBITDA and EPS over FY2025-28E.
Key Stock Levels and Investor Targets
Current Market Metrics and Target Price
Current Market Price (CMP): Rs 633
Fair Value Target: Rs 825
52-Week Range: Rs 961 (high) – Rs 599 (low)
Market Capitalization: Rs 255 billion (approx. $3.0 billion)
Rating: BUY
Target Return: >15% over the next 12 months
Valuation Multiples and Financial Ratios
| Metric | 2025 | 2026E | 2027E |
|---|---|---|---|
| EPS (Rs) | 11.7 | 10.5 | 14.6 |
| P/E (x) | 53.9 | 60.1 | 43.4 |
| EV/EBITDA (x) | 23.2 | 23.1 | 17.6 |
| RoE (%) | 10.5 | 8.6 | 11.0 |
| Dividend Yield (%) | 0.2 | 0.2 | 0.3 |
Strategic Growth Drivers
Biologics CDMO: The Star Performer
Syngene’s biologics CDMO segment delivered over 20% YoY growth in FY2025, fueled by the acquisition of Emergent’s US biologics facility and expanded animal health capabilities. The company’s investments in commercial-scale bioconjugation and advanced protein production platforms are expected to further accelerate growth in this high-margin segment.
Pilot CRO Projects: From Experiment to Execution
Amid global biotech funding headwinds, Syngene has successfully converted six out of thirteen pilot CRO projects—initiated by large and mid-sized pharma clients seeking to diversify away from China—into full-fledged long-term contracts. This conversion, coupled with a robust pipeline supported by a 50+ member international sales team, is projected to drive a 13% CAGR in discovery sales through FY2028.
Investments in ADCs, Peptides, and Oligonucleotides
The company is doubling down on next-generation therapeutics, with significant capex allocated to antibody-drug conjugates (ADCs), peptides, and oligonucleotides. The expansion of ADC discovery and commercial-scale bioconjugation capabilities at its Bengaluru site is a testament to Syngene’s commitment to staying ahead of the innovation curve.
Operational Realignment and Facility Expansion
Small Molecule CDMO: Rebuilding for the Next Wave
After a 24% YoY decline in small molecule CDMO sales in FY2025, Syngene has restructured its operating model, integrating development and manufacturing divisions and consolidating its salesforce. Early signs of recovery are evident in increased process R&D projects and a stronger pipeline, with expectations of a rebound in FY2026.
Facility Utilization: Unlocking Latent Capacity
Syngene’s four major facilities—Bengaluru, Mangaluru, Unit-III (Stelis acquisition), and Baltimore (Emergent acquisition)—offer significant headroom for scaling CDMO operations. While Bengaluru operates at optimal asset turnover, other units are ramping up. At peak utilization, these sites could generate incremental sales of Rs 25 billion, representing a 2.7x surge in CDMO revenues.
Client Concentration and Revenue Diversification
Top Clients and Sectoral Exposure
Syngene’s top two clients, BMS and Zoetis, contributed 41% to overall revenues in FY2025. Notably, the company’s long-term manufacturing contract for Librela with Zoetis remains a key revenue stream, although FY2026 is expected to see a temporary dip due to inventory destocking. Nevertheless, underlying demand for Librela remains robust, and Syngene continues to be the primary drug substance supplier for Zoetis.
Financial Performance and Growth Outlook
Consistent Revenue and Profit Expansion
Kotak forecasts a 15% CAGR in sales from FY2025-28E, underpinned by strong momentum in both discovery and CDMO segments. EBITDA margins are expected to recover post-FY2026 as facility utilization improves and the product mix shifts towards higher-margin biologics and integrated projects.
Geographical Revenue Mix
The United States remains the largest contributor to Syngene’s revenues, with a growing share from Europe and other international markets as the company expands its global footprint.
Risks and Investment Considerations
Funding Environment Remains a Key Variable
The primary risk to the growth outlook is the uncertain recovery in global biotech funding, which could delay decision-making and contract conversion in the CRO segment. However, Syngene’s diversified client base and strategic investments in high-growth verticals are expected to mitigate these risks over the medium term.
A Compelling Growth Story with Upside Potential
Investor Takeaway
Kotak Institutional Equities’ BUY recommendation on Syngene International is anchored in the company’s strong execution, expanding capabilities in biologics and advanced therapeutics, and a clear path to margin and revenue growth. With a fair value target of Rs 825 and a projected return exceeding 15% over the next year, Syngene stands out as a premier play in the Indian pharmaceutical contract research and manufacturing landscape.
