Zoetis loss cripples Q1; new strategy unproven but credible

₹736 Cr revenue, -16% YoY (₹136 Cr decline); Mgmt cites ~$50M Zoetis impact (~₹425 Cr annualized)

12% EBITDA margin vs expected mid-20s; FX loss cited as ~55% of margin gap

CDMO only 22% of Q1 revenue; Bayview unoperationalized, Stelis only clinical-stage, Mangalore ramp unproven

No locked-in orders named; management said 'green shoots' and 'better visibility next quarter', deferring specifics

Prior: 'broadly flat FY27'. New: 'single-digit decline in rupee terms'. Zoetis loss wider than anticipated.

Mid-20s reaffirmed, but Q1 at 12% vs expected ~23% for full-year guidance. Relies on H2 recovery and cost optimization.

Acknowledged drift to commoditized services. New CEO brought in. CDMO/AI/clinical now primary focus. Not a change to prior FY26 guidance but new execution model.

Abhijit Zutshi (ex-Biocon CCO) leading new commercial engine. First major hire signalling discipline.

Zoetis impact ~$50M annually; H1 weak H2 better; Mangalore/Bayview ramping commercial/clinical molecules this year; gestation lag from RFP to revenue. H2 stronger.

Took offline. Acknowledged commoditization pressure; pivoting to AI, oligos, ADCs, bispecifics, clinical-stage molecules for high value. Deferred classification breakdown.

Bayview: 'green shoots', expressions of interest, 1-2 molecules converted to CMO requirement, revenues start FY28. Stelis: customers signed, batches taken, clinical/development stage mostly. Mangalore: commercial and clinical lock-ins, significant ramp this year. Better color next quarter.

Q4 seasonally strongest. Cost optimization ongoing (people costs, operating leverage). Revenue uptick in H2. Forex normalizes. Prior steady-state margins higher than mid-20s; confident in holding line.

Agreed to share prior webinar, commit to presentation later in year. Flagged India regulatory headwinds; India approvals slow vs Australia/Europe; partnerships in other geographies active. Opportunity huge but dependent on regulatory changes.

Cannot quantify at this stage. New leadership team; ask for a quarter to do deep diagnosis. Will have better clarity next quarter. Focus on financial discipline, cost cutting.

Revised from prior 'broadly flat'. Zoetis loss primary driver; H2 expected stronger but dependent on CDMO ramp and new commercial org execution. No quantified FY27 target given.

Prior guidance maintained. Q1 at 12% due to FX loss and revenue decline; recovery in H2 expected via cost optimization, revenue uptick, and seasonal strength in Q4. Hedged on sustainability into FY28.

Q1 capex ₹70 Cr. No full-year target disclosed. Committed to multi-year facility expansion; investments prioritized over dividend/buybacks.

Zoetis offtake absent Q1; ~$50M annual impact. Inventory for 2 years; deliveries continue H2 FY27 and into FY28 but significantly reduced. Company admits over-dependence on single customer.

Management admits drift to commoditized research services; losing pricing power. Attrition of 'a few clients' in research services Q1 (not quantified). 78% of revenue at risk if trend continues.

Bayview (US large-molecule CDMO) not yet operational; 1-2 molecules at CMO stage but revenues only FY28+. Stelis clinical-stage majority; no commercial-scale molecules yet. Mangalore lock-ins claimed but ramp timing unproven.

India regulatory pathway for Phase I/II approvals much longer than Australia, Europe, US. Clinical trial business 'small base' but growing; dependent on regulatory changes to scale. Partnerships in Australia, Europe active workaround but adds complexity.

Q1 FX hedge loss ₹50 Cr; non-operating but material (55% of margin miss). Syngene earns heavily in USD (exports); FX volatility unavoidable. Hedging policy costly.