Syngene International Limited announced its unaudited financial results for the quarter and nine months ended December 31, 2025, revealing a challenging performance marked by significant profit decline and regulatory-driven exceptional charges. The contract research and manufacturing services company faced headwinds from new labour regulations that substantially impacted its bottom line.

Standalone Financial Performance

The company's standalone operations showed a sharp deterioration in profitability during Q3FY26. Net profit plummeted 86.6% year-on-year to ₹165 million from ₹1,231 million in the corresponding quarter of the previous year. Revenue from operations declined 4.9% to ₹8,344 million compared to ₹8,771 million in Q3FY25.

The company's profit before tax and exceptional items stood at ₹959 million, down 43.5% from ₹1,698 million in Q3FY25. However, exceptional charges of ₹658 million severely impacted the final profit figure.

Consolidated Results Show Similar Trends

Consolidated financial results mirrored the standalone performance challenges. Net profit declined 88.6% to ₹150 million from ₹1,311 million year-on-year. Consolidated revenue from operations decreased 2.8% to ₹9,171 million compared to ₹9,437 million in Q3FY25.

Consolidated exceptional charges amounted to ₹706 million, slightly higher than the standalone figure due to subsidiary impacts.

Nine-Month Performance Analysis

For the nine months ended December 31, 2025, standalone performance showed mixed results. While revenue grew marginally by 1.6% to ₹24,638 million from ₹24,249 million, net profit declined 46.6% to ₹1,567 million from ₹2,936 million in the corresponding period last year.

Consolidated nine-month revenue increased 3.0% to ₹27,022 million, while net profit dropped 46.1% to ₹1,688 million.

Exceptional Charges Impact Results

The significant exceptional charges of ₹658 million (standalone) and ₹706 million (consolidated) stemmed from the implementation of India's new Labour Codes. These charges primarily related to incremental gratuity provisions arising from changes in wage definitions under the consolidated labour regulations notified on November 21, 2025.

The company noted that this impact was regulatory-driven and non-recurring in nature. Management continues to monitor the finalization of central and state rules and government clarifications on various aspects of the Labour Code for future compliance requirements.

Operational Highlights and Corporate Developments

During the reporting period, the company made several operational advances. It received licensing for a drug substance production line and bonded warehouse license at its biologics manufacturing facility in Bangalore, resulting in the capitalization of ₹3,438 million as property, plant and equipment.

The company also allotted 402,439 equity shares to the Syngene Employees Welfare Trust at face value for implementing its Long Term Incentive Performance Share Plan 2023. Additionally, shareholders approved a final dividend of ₹1.25 per equity share during the annual general meeting held on July 23, 2025.

Financial Position and Outlook Considerations

The company's paid-up equity share capital stood at ₹4,029 million as of December 31, 2025, compared to ₹4,025 million in the previous year. Total expenses increased across both standalone and consolidated operations, with employee benefit expenses rising to ₹2,175 million and ₹2,674 million respectively in Q3FY26.

Foreign exchange fluctuations also impacted results, with the company recording a net loss of ₹234 million (standalone) and ₹232 million (consolidated) during the quarter, compared to gains in the previous year period.

Syngene International Limited announced on Monday, January 19, an extension of its long-term strategic research collaboration with Bristol Myers Squibb, with the partnership now set to run until 2035. This development further deepens a relationship that spans more than 25 years between the Bengaluru-based contract research, development and manufacturing organisation (CRDMO) and the pharmaceutical giant.

Partnership Expansion Details

The expanded agreement significantly broadens the scope of integrated services across the drug development lifecycle. The collaboration will encompass multiple critical areas designed to enable seamless progression of drug candidates from early research to commercialisation.

Leadership Perspectives

Syngene Managing Director and CEO Peter Bains emphasised that the partnership, spanning over 25 years, is anchored in scientific excellence and operational reliability. "The agreement to extend this partnership through 2035 enables us to plan together for the future in terms of building new capabilities and infrastructure with a decade long horizon," Bains stated.

Payal Sheth, Senior Vice President, Therapeutic Discovery Sciences at Bristol Myers Squibb, highlighted the strategic importance of the collaboration. "This expanded collaboration reflects our commitment to advancing innovative science by effective integration of our research, development, and manufacturing capabilities to accelerate the delivery of transformative medicines and bring hope to patients around the world who are waiting for new treatment options," Sheth said.

Research Center Evolution

The collaboration between the two companies began in 1998 and led to the establishment of the Biocon Bristol Myers Squibb Research and Development Center (BBRC), Syngene's first dedicated R&D centre, which was fully commissioned in 2009. The BBRC has since evolved into a major strategic R&D hub for Bristol Myers Squibb, supporting comprehensive capabilities across multiple scientific disciplines.

The centre currently houses around 700 Syngene scientists working as an extension of Bristol Myers Squibb's global research organisation, contributing to discovery, preclinical development and patent filings across therapeutic areas such as cardiovascular, fibrosis, immunology and oncology.

Market Performance and Analyst View

Macquarie maintained its "outperform" rating on Syngene with a price target of ₹835.00 apiece, indicating an upside potential of nearly 28% from its previous close. The brokerage believes that Syngene offers an attractive risk-reward profile and expects fundamentals to improve while valuations remain attractive.

Shares of the company were trading marginally down at ₹627.00 as of 11:10 am, still higher than the intraday lows of ₹619.95. The stock has dropped 4.14% in the past one month.