Reviews

In this edition, we have reviewed Satia Industries Ltd. and Syngene International Ltd. We suggest our readerinvestors to HOLD Satia Industries Ltd. and Syngene International Ltd. 

We had recommended Satia Industries Ltd. in Volume 37, Issue No. 26 dated November 21 – December 4, 2022, under the ‘Low Priced Scrip’ segment. The recommended price for the stock was ₹148.65. We had recommended the stock on the basis of the country’s growing power demand, infrastructure development and transportation sector. Satia Industries is a leading wood and agro-based paper plant in India, producing quality writing and printing paper using various materials like wood chips, veneer waste, wheat straw and sarkanda. Established in 1984, the company has undergone modernisation and expansion schemes. 


It has a chemical recovery plant, power co-generation plant and a continuous digester to improve pulp quality and reduce cooking chemicals. Satia Industries also trades in cotton and yarn. It offers a wide product mix with high market acceptance. In Q1FY24, Satia Industries’ consolidated revenue decreased by 22.41 per cent QoQ at ₹373.36 crore as compared to ₹481.17 crore in the previous quarter same year. On a YoY basis, its revenue decreased by 18.71 per cent. The PBIDT excluding other income decreased by 7.06 per cent to ₹86.41 crore YoY as compared to `149.30 crore from the previous year’s same quarter. 
 

On a QoQ basis, it decreased by 42.12 percent. The company’s net profit stood at ₹47.94 crore as compared to ₹84.15 crore, a QoQ decrease of 43.03 per cent, while YoY it decreased by 5.65 per cent. At TTM, Satia Industries is trading at a PE of 4.97 times, which is lower than its three-year median PE. The company has maintained a healthy three-year average ROE and ROCE of 21.9 per cent and 16 per cent, respectively. It has a three-year compounded sales and profit growth of 32 per cent and 28 per cent, respectively. The company has a debt-to-equity ratio of 0.50 times with an interest coverage ratio of 8.55 times. 
 

Satia Industries is poised to capitalise on the country’s growing power demand, infrastructure development and transportation sector. India’s power demand is expected to grow at a CAGR of 5-6 per cent in the coming years, driven by factors like urbanisation and rising incomes. The Indian government’s investment in infrastructure projects such as roads, railways and airports, will create opportunities for Satia Industries to supply its power generation and transmission products. The transportation sector is also expected to grow at a CAGR of 6-7 per cent. Hence, we recommend HOLD. 

We had recommended Syngene International Ltd. in Volume 37, Issue No. 26 dated November 21 – December 4, 2022, under the ‘Analysis’ segment. The recommended price for the stock was ₹613.90. We had recommended the stock on the basis of the strong track record, solid pipeline of new projects and favourable industry outlook. Established in 1993, the company is an internationally recognised contract research and manufacturing organisation that supports research and development programmes from lead generation to clinical supplies. 
 

With multi-disciplinary skills in integrated drug discovery and development, Syngene International has successfully offered services to start-up companies, large pharmaceutical and biotech corporates, and agrochemical, chemical, nutrition, and animal health companies in the USA, Europe and Asia Pacific. The company’s business area includes contract research and manufacturing services for pharmaceutical and biotechnology companies worldwide. In Q1FY24, Syngene International’s consolidated revenue increased by 12.62 per cent QoQ at ₹910.10 crore as compared to ₹808.10 crore in the previous quarter same year. On a YoY basis, its revenue increased by 18.49 per cent. The PBIDT excluding other income increased by 17.37 per cent to ₹254.10 crore YoY as compared to ₹211.90 crore from the previous year’s same quarter. On a QoQ basis, it increased by 19.92 percent. 
 

The company’s net profit stood at ₹116.50 crore as compared to ₹102 crore, a QoQ increase of 24.73 per cent, while YoY it increased by 14.22 per cent. At TTM, Syngene International is trading at a PE of 57.6 times, which is lower than its three-year median PE. The company has maintained a healthy three-year average ROE and ROCE of 14 per cent and 13.9 per cent, respectively. It has a three-year compounded sales and profit growth of 17 per cent and 9 per cent, respectively. The company has a debt-to-equity ratio of 0.21 times. 
 

The key growth triggers for Syngene International include the growing demand for outsourced research and development services, the company’s strong track record of innovation, and its expanding global footprint. The pharmaceutical industry is outsourcing research and development activities due to rising costs, specialised expertise, and shortening time to market for new drugs. The company’s commitment to innovation and expanding capabilities positions it well to capitalise on this growing demand for outsourced services. Its growth is expected to continue due to its strong track record, solid pipeline of new projects and favourable industry outlook. Hence, we recommend HOLD.

(Closing price as of November 08, 2023)