Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Core business remains strong; maintain BUY
BIOS’ core business performance for Q1FY12 broadly matched our expectations.
The reported PAT, however, was below our estimate due to lower licensing income.
We are enthused by the recovery in the company’s Research Services business for
two consecutive quarters now, helped by its sharpened focus on providing high-value
added services and client-base expansion. BIOS’ Biopharma business remains stable
with its domestic branded formulations business gaining strong traction.
Fidaxomicin supplies to Optimer (which started in June ’11) would help gain further
momentum in this segment. Maintain BUY.
Research Services posts a solid 21% growth: BIOS’ Research Services business
posted a 21% YoY growth as the company migrated from a partially commoditised
business model to a one with more integrated service offerings. The Biopharma
business grew 10% led by strong growth momentum in immunosuppresants (+40%
YoY) and domestic formulations (+28% YoY). Statins, however, remained stable.
Incremental revenues from Fidaxomicin supplies would drive future growth in the
Biopharma segment. Further, PFIZ plans to launch insulin and glargine over the next
1–2 months for which BIOS will begin product supplies shortly—this would be a
long-term revenue driver for BIOS. Licensing income was at Rs 144mn (-30% YoY).
Core operating margins expand ~130bps: BIOS’ core EBITDA margin (exlicensing/
Axicorp) expanded 131bps YoY to 24.8% driven by (a) improvement in
gross margins (increased contribution from the high-margin Research Services
business) and (b) lower R&D/other expenses which offset the higher staff costs (up
27% YoY). EBITDA was up 19% YoY while core PAT grew 24% YoY, reflecting
the strong operating performance and higher other income.
Numbers adjusted for Axicorp; reiterate BUY: We pare our FY12E/13E earnings
estimates by 2%/1% as we adjust numbers for Axicorp. The stock is trading at a PER
of 18.7x/16.4x FY12E/FY13E. We remain positive on BIOS given its superior basebusiness
margins, strong balance sheet and a robust biogenerics/novel portfolio. We
maintain our BUY rating on the stock with a target price of Rs 550.
Concall takeaways and business highlights
Research Services business: BIOS continues to witness strong revenue traction in its
Research Services business for two consecutive quarters now, with growth rates of
20%/21% in Q4FY11/Q1FY12. Operating margins also recovered to ~32% (after
slumping to 20–25% last year) supported by the company’s robust product offerings. The
momentum is expected to continue, going forward.
Biopharma: BIOS continued to see growth in domestic branded formulations primarily
driven by the diabetology segment. Immunosuppresants also continued to post robust
growth (launched one new immunosuppressant in India). BIOS’ Statins business remains
stable and the company does not expect any major pressure here despite an expected
genericisation of Atorvastatin by CY11-end. While the company faced certain headwinds
from its Middle East business (especially Egypt and Syria), it expects growth in other
emerging markets to compensate for slowdown this region.
Licensing income was lower in Q1FY12 as such receipts continue to be highly dependent
on various regulatory/development milestones.
The Pfizer deal: PFIZ, as per the deal entered into with BIOS in Oct ’10, has registered
for selling insulin and glargine in several markets and would launch these products in the
next 1–2 months. BIOS expects to begin product supplies to PFIZ shortly.
Fidaxomicin supplies to Optimer have begun and the company has indicated that it has
sufficient capacities to meet demand for this product.
Insupen launch in Q2FY12: The product will be manufactured by a German company.
The Mylan deal: The deal with Mylan remains on track, with ~4–5 biologics products
having been selected for co-development. The management sees no meaningful impact of
this deal over the next 4–5 years until the company enters US/EU markets where
guidelines on biosimilars still remain unclear.
BIOS has net cash of Rs 5.5bn as on June ‘11
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Core business remains strong; maintain BUY
BIOS’ core business performance for Q1FY12 broadly matched our expectations.
The reported PAT, however, was below our estimate due to lower licensing income.
We are enthused by the recovery in the company’s Research Services business for
two consecutive quarters now, helped by its sharpened focus on providing high-value
added services and client-base expansion. BIOS’ Biopharma business remains stable
with its domestic branded formulations business gaining strong traction.
Fidaxomicin supplies to Optimer (which started in June ’11) would help gain further
momentum in this segment. Maintain BUY.
Research Services posts a solid 21% growth: BIOS’ Research Services business
posted a 21% YoY growth as the company migrated from a partially commoditised
business model to a one with more integrated service offerings. The Biopharma
business grew 10% led by strong growth momentum in immunosuppresants (+40%
YoY) and domestic formulations (+28% YoY). Statins, however, remained stable.
Incremental revenues from Fidaxomicin supplies would drive future growth in the
Biopharma segment. Further, PFIZ plans to launch insulin and glargine over the next
1–2 months for which BIOS will begin product supplies shortly—this would be a
long-term revenue driver for BIOS. Licensing income was at Rs 144mn (-30% YoY).
Core operating margins expand ~130bps: BIOS’ core EBITDA margin (exlicensing/
Axicorp) expanded 131bps YoY to 24.8% driven by (a) improvement in
gross margins (increased contribution from the high-margin Research Services
business) and (b) lower R&D/other expenses which offset the higher staff costs (up
27% YoY). EBITDA was up 19% YoY while core PAT grew 24% YoY, reflecting
the strong operating performance and higher other income.
Numbers adjusted for Axicorp; reiterate BUY: We pare our FY12E/13E earnings
estimates by 2%/1% as we adjust numbers for Axicorp. The stock is trading at a PER
of 18.7x/16.4x FY12E/FY13E. We remain positive on BIOS given its superior basebusiness
margins, strong balance sheet and a robust biogenerics/novel portfolio. We
maintain our BUY rating on the stock with a target price of Rs 550.
Concall takeaways and business highlights
Research Services business: BIOS continues to witness strong revenue traction in its
Research Services business for two consecutive quarters now, with growth rates of
20%/21% in Q4FY11/Q1FY12. Operating margins also recovered to ~32% (after
slumping to 20–25% last year) supported by the company’s robust product offerings. The
momentum is expected to continue, going forward.
Biopharma: BIOS continued to see growth in domestic branded formulations primarily
driven by the diabetology segment. Immunosuppresants also continued to post robust
growth (launched one new immunosuppressant in India). BIOS’ Statins business remains
stable and the company does not expect any major pressure here despite an expected
genericisation of Atorvastatin by CY11-end. While the company faced certain headwinds
from its Middle East business (especially Egypt and Syria), it expects growth in other
emerging markets to compensate for slowdown this region.
Licensing income was lower in Q1FY12 as such receipts continue to be highly dependent
on various regulatory/development milestones.
The Pfizer deal: PFIZ, as per the deal entered into with BIOS in Oct ’10, has registered
for selling insulin and glargine in several markets and would launch these products in the
next 1–2 months. BIOS expects to begin product supplies to PFIZ shortly.
Fidaxomicin supplies to Optimer have begun and the company has indicated that it has
sufficient capacities to meet demand for this product.
Insupen launch in Q2FY12: The product will be manufactured by a German company.
The Mylan deal: The deal with Mylan remains on track, with ~4–5 biologics products
having been selected for co-development. The management sees no meaningful impact of
this deal over the next 4–5 years until the company enters US/EU markets where
guidelines on biosimilars still remain unclear.
BIOS has net cash of Rs 5.5bn as on June ‘11
No comments:
Post a Comment