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Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter - Views on News from Equitymaster
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  • Jun 23, 2017 - Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter

Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter
Jun 23, 2017

Biocon has announced its 4QFY17 results. The company has reported 2.7% YoY decline in net sales and net profits of Rs 1.27 billion for the quarter. Here is our analysis of the results.

Performance summary
  • Net Sales declined by 61.7% YoY during the quarter, due to exceptional items worth 2.6 billion recorded in the previous year. On a year on year basis, Biocon's Branded Formulations business witnessed growth of 25%. This was due to accounting standards adopted from April last year. On a like-to-like basis, the segment growth was flat.
  • Operating margins declined slightly by 130 basis points for the quarter, largely on the back of forex losses. Biocon booked a forex loss of 170 million excluding which operating margins were similar to last year.
  • Net profits reported for the quarter were Rs 1.27 billion versus Rs 3.3 billion in 4QFY16. This largely pertains to exceptional income worth 2.6 billion recorded in 4QFY16.
  • Tax rate appears lower due to recognition of deferred tax and MAT credit entitlement for the whole year in this quarter.

    Financial performance: A snapshot
    (Rs m) 4QFY16 4QFY17 Change FY16 FY17 Change
    Net sales 9,567 9,311 -2.7% 33,810 39,216 16.0%
    Other operating income 0 0 0 0  
    Expenditure 7,521 7,436 -1.1% 26,132 29,421 12.6%
    Operating profit (EBDITA) 2,046 1,875 -8.4% 7,678 9,795 27.6%
    EBDITA margin (%) 21.4% 20.1%   22.7% 25.0%  
    Other income 160.0 432.0 170.0% 792 1,571 98.4%
    Interest (net) 205.0 50.0 -75.6% 293 260 -11.3%
    Depreciation 648.0 725.0 11.9% 2,487 2,772 11.5%
    Profit before tax 1,353 1,532 13.2% 5,690 8,334 46.5%
    Share of Profit of Joint Venture 53 55   217 163  
    Exceptional Items 2,684 0   1,606 0  
    Tax 546 103 -81.1% 1,422 1,616 13.6%
    Minority Interest 214 209   587 760  
    Profit after tax/(loss) 3,330 1,275 -61.7% 5,504 6,121 11.2%
    Net profit margin (%) 34.8% 13.7%   16.3% 15.6%  
    No. of shares (m) 600 600   600 600  
    Diluted earnings per share (Rs)       9.2 10.2  
    Price to earnings ratio (x)*         32.5  

    *based on trailing 12 months earnings


    Business Mix 4QFY16 4QFY17 Change FY16 FY17 Change
    Biopharmaceuticals 5,587 5,581 -0.1% 19,879 23,423 17.8%
    (% of consolidated revenues) 58% 60%   59% 60%  
    Branded Formulations 1,049 1,310 24.9% 4,409 5,489 24.5%
    (% of consolidated revenues) 11% 14%   13% 14%  
    Contract Manufacturing 3,315 2,828 -14.7% 11,070 11,925 7.7%
    (% of consolidated revenues) 35% 30%   33% 30%  
    Less: Inter-segment Revenue 384 408   1,548 1,621  
    Total 9,567 9,311 -2.7% 33,810 39,216 16.0%
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