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Biocon: Lower R&D Expenses Help Margin Expansion - Views on News from Equitymaster
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Biocon: Lower R&D Expenses Help Margin Expansion
Sep 19, 2016

Biocon has announced its 1QFY17. The company has reported 21.1% YoY growth in total income and 34.6% YoY increase in net profits. Here is our analysis of the results.

Performance summary
  • Topline grows by 21.1% YoY during the quarter, largely driven by both biopharmaceuticals and contract manufacturing segments. The growth in the Biopharmaceuticals segment was driven by biosimilar business. As per the management, business should continue to witness strong growth on the back of new launches in various emerging markets and ramp-up of biosimilar insulin Glargine in Japan in the coming quarters.
  • Operating margins improve by 1.5%, consequently even the operating profits grow by 28.3% YoY for the quarter. This was partially helped by lower R&D expenses for the quarter.
  • Net profits are up by 34.6% YoY during the quarter.

    Financial performance: A snapshot
    (Rs m) 1QFY16 1QFY17 Change
    Net sales 8,105 9,814 21.1%
    Expenditure 6,127 7,276 18.8%
    Operating profit (EBDITA) 1,978 2,538 28.3%
    EBDITA margin (%) 24.4% 25.9%
    Other income 304 502 65.1%
    Interest (net) 44 57
    Depreciation 591 661 11.8%
    Profit before tax 1,647 2,322 41.0%
    Tax 376 552 46.8%
    Profit after tax/(loss) 1,271 1,770 39.3%
    Minority Interest 33 104 215.2%
    Net profit after minority int 1,238 1,666 34.6%
    Net profit margin (%) 17.0%
    No. of shares (m) 200
    Diluted earnings per share (Rs) 29
    Price to earnings ratio (x)* 32.12

    *based on trailing 12 months earnings and adjusted over exceptional item

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