Exceptional Gains Boost Biocon's Net

Bangalore-based Biocon has come up with a disappointing set of Q4FY13 results. The Biopharma major has reported 7% growth in the topline to Rs 630 crore. The net profit, however, is up by 156% to Rs 250 crore, thanks to the one-time exceptional gains of Rs 201 crore on account of the deal with Mylan which boosted its profitability. Excluding this gain, its performance is eroded with the net profit down by nearly 30% on a YoY basis. Despite a 2.5x jump in the net profit, its shares are trading down by nearly 4% indicating that the markets have noticed the weakness in its core business.

During the quarter, the company has seen 4.3% decline in its revenues from the pharma business. CRAMS revenues, on the other hand, have shown a growth of 34%. The other operating income has declined by 67% to Rs 7 crore.

On the margins front, the company has also reported pressure on the EBITDA margins which are down by nearly 660 basis points to 17.79%. The main reason for the margins to have dropped is that the employee cost during the quarter has increased by 34%. Besides, raw material costs, which is a major cost component has increased by 16%, increasing total costs. The PBIT margins of the pharma business are up by over 600 basis points while that of CRAMS business are down by 387 basis points.

Biocon had entered in a partnership deal with pharma MNC Mylan last year. The deal has now extended to the generic insulin analogs under which it has received USD 20 million as an upfront payment which boosted the profit at the net level.

On the balance sheet front, the company has raised more long-term debt in FY13 while the short-term debt has reduced by about Rs 102 crore. The liquidity ratios have also improved this year as compared to the last year.

On the outlook, the company has said that it will put more emphasis on developing generic portfolio and hence its R&D costs will rise. It expects to put a good revenue growth in FY14. The company has also said that the Malaysian facility will be completed by FY15 which will give a boost to the company’s growth.