biocon ltd q2fy12 result update

8/3/2019 Biocon Ltd Q2FY12 Result Update

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: [email protected]

10/21/2011

NG TERM INVESTMENT CALL

BUY21 October 2011

Company Report | Q2/H1FY12 Result Update

Biocon came up with Q2 & H1FY12 results, which were better than

our estimates. The top line came in at INR 5084mn posting a growth of21% on YoY basis. However there was a concern observed on the

operating margin front which reduced by 400 bps on YoY basis and

came in at 26.2%. The operating profit reported a growth of 3% and

the net profit increased by 4.6% when compared on like to like basis.

Backed with the launch of Insupen, the much awaited product of

Biocon and initiation of supply of Fidaxomicin API to Optimer,

Biocon is expected to generate better revenue in H2FY12 and in the

next fiscal.

Q2FY12 Result highlights

Strong Revenue growth

Biocon reported a topline growth of 21% YoY, with the total income at

INR 5084mn. backed by strong performance across all the major

verticals of the company.

Biopharma business showed a YoY growth of 16% with Statins,

immunosuppressant and Insulin division performing well. Biocon

initiated the supply of Fidaxomicin API to Optimer in June 2011, and is

the sole supplier of the API. The product is expected to perform well incoming quarters led by increasing demand in the global market.

The licensing income for the quarter grew to INR 365 mn from INR

231mn reported for the same period last year. The research services

business of the company grew by 20%.

The branded formulation business posted 37% growth YoY, with

Diabetology segment being the outperformer showing a growth of 46%.

Biocon also launched 2 new products viz; Volicose and Metadoze in the

segment. The other segments of the business like Nephrology,

Oncotherapeutics, immunotherapy, Comprehensive care & cardiologyalso performed well posting a double digit growth.

Operating margin remained subdued

The operating margins in Q2FY12 remained under pressure due to high

manufacturing expenses and employee cost which increased YoY by

25% and 38% respectively. During the quarter Biocon increased its

employee strength to 5800 from 4700 which led to the increased

employee cost. However going ahead in H2FY12 we expect the margins

to regain its momentum backed by revenue from Fidaxomicin and

Insupens. Also the licensing income is expected to ramp up in the

coming quarters.

Industry Biotechnology

CMP (INR) 347Target (INR) 420

Upside / Downside (%) 21

52 week High/Low (INR) 454/302

Market Cap (INR BN) 69

3M Avg. Daily Volumes (000) 376.5

P/E (FY12e) 15.1x

Shareholding Pattern (%)

Stock Performance

Performance (%)

1 Month 3 Months 1 Year

Biocon 3.5 -6.3 21.6

Nifty -0.9 -8.5 -14.9

* Source: Bloomberg, Unicon Research


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Other developments

Biocon launched its much awaited product INSUpen on October 17,

2011, which is a reusable insulin delivery device. Revenue from the

product is expected from next quarter onwards.

Pfizer launches Insulin & Glargine under the brand name Univia and

Glarvia for which Biocon is a co-marketing partner.

Biocon expects to submit an IND and commence the PI study for

Phybrid program in partnership with its co development partner

Amylin.

The Malaysian project has been initiated in September 2011.

Outlook and valuation

Biocon is expected to ramp up its revenue going forward in H1FY12,

with expected increase in licensing income and contribution from

other revenue boosters like Fidaxomicin & Insupen. We maintain our

positive stance on the company and maintain BUY rating at the CMP

of INR 347 valuing the stock at ~14.5x its FY13E earnings with the

target price of INR 420.


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Financials

(INR in mn)

Particulars Q2 FY12 Q2 FY11 % Growth YoY Q1FY11 % Growth QoQ

Total Income from Operations 5084 4203 21.0 4417 15.1

Material & Power cost 2369 1891 25.3 1890 25.3

% of sales 46.6 44.9 42.8

Employee Expense 724 524 38.2 693 4.5

% of sales 14.2 12.5 15.7

R&D & Other Expenses 657 491 33.8 630 4.3

% of sales 12.9 11.7 14.3

Total expenditure 3750 2906 29.0 3213 16.7

Operating Profit 1334 1297 2.9 1204 10.8

OPM % 26.2 30.9 -470 bps 27.3 -110 bps

Other Income 160 74 116.2 123 30.1

Interest 20 62 -67.7 57 -64.9

Depreciation 429 379 13.2 451 -4.9

PBT 1045 930 12.4 819 27.6

Tax 188 111 69.4 119 58.0

Tax Incidence 17.9 11.9 14.5

PAT 857 819 4.6 700 22.4

Profit from discontinued

operation

0 73 -100.0 0

Adjusted PAT 857 892 -3.9 700 22.4

PATM % 16.9 21.2 -430 bps 15.9 100 bps

EPS 4.29 4.46 3.5

Source: Company, Unicon Research

*Consolidated


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Unicon Investment Ranking Methodology

Rating Buy Accumulate Hold Reduce Sell

Return Range >= 20% 10% to 20% -10% to 10% -10% to -20%

biocon ltd q2fy12 result update

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