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Biocon (BIOS)
Pharmaceuticals
PAT miss due to lower biopharma sales. Lower biopharma sales and one-off
expenses were the main reasons for PAT miss of 13%, shaving off Rs150 mn from
3QFY12 PAT of Rs848 mn, according to our estimates. We cut our FY2012-13E EPS
by 4-10% mainly due to lower licensing income. Though performance has been
muted YTD, we believe the core biopharma business remains healthy with growth
drivers intact. Maintain BUY with target price at Rs380 (was Rs390).
Total sales at Rs5 bn, up 13% yoy on a like-to-like basis, lower than our estimates
We look at total sales excluding licensing income due to inherent volatility in reporting of licensing
income. Total sales ex-licensing were up 13% yoy and 3% qoq to Rs4.9 bn, 9% lower than our
estimates. Contract research showed strong growth at 20% qoq for the fourth quarter in a row, in
line with our estimate. However, biopharma sales excluding licensing income at Rs3.76 bn grew
only 6% yoy, down in Dollar terms and 12% below our estimates, and was the main reason for
the disappointment. The company attributed this to diversion of capacities towards batch supplies
for early clinical trials of insulin lispro and aspart.
PAT at Rs848 mn, 13% below our estimates of Rs979 mn
Lower biopharma sales was the main reason for the PAT miss of 13%. EBITDA margin adjusting
for Rs100 mn one-off expenses (promotional spend towards launch of insulin pen device in India)
was at 28.6%, flat qoq, in line with our estimates. Gross margin expanded by 200 bps qoq despite
no sequential growth in biopharma sales. We believe the one-off expenses and lower biopharma
sales due to diversion of capacities shaved off Rs150 mn from PAT (see Exhibit 2).
We reduce FY2012-13E EPS by 4-10%; our FY2013E estimates in line with numbers reported YTD
We reduce our FY2012-13E EPS by 4-10% primarily on account of (1) lower licensing fees at
US$25 mn versus US$40 mn earlier against US$17 mn reported YTD, and (2) lower margin
assumption at 29%-29.5%, down 60 bps yoy and in line with margin reported YTD. We estimate
sales ex-licensing to grow at 17% in FY2012E (see Exhibits 3 and 4) versus 17/15% growth seen in
FY2011/9MFY12 and 20% in FY2013E due to higher Rupee assumptions.
We maintain BUY with TP at Rs380 (was Rs390), 16X core FY2013E EPS
In 9MFY12, muted reported PAT growth is due to (1) recognition of lower licensing income
leading to PAT contribution of Rs140 mn in 9MFY12 versus Rs700 mn in 9MFY11. We have
reduced our FY2013E licensing income estimates accordingly, and (2) excluding licensing income,
PAT from biopharma and research has grown significantly to Rs2.2 bn from Rs1.7 bn, up 29% yoy
partly due to turnaround in Syngene. Excluding contract research, PAT growth was 17% in
1HFY12, however, dipping in 3QFY12 due to one-time expenses and lower biopharma sales. We
expect biopharma sales to pick up in FY2013E on account of (1) stable statin sales, (2) Fidaxomicin
supplies, and (3) higher insulin supplies which were affected in 1Q/3QFY12.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Biocon (BIOS)
Pharmaceuticals
PAT miss due to lower biopharma sales. Lower biopharma sales and one-off
expenses were the main reasons for PAT miss of 13%, shaving off Rs150 mn from
3QFY12 PAT of Rs848 mn, according to our estimates. We cut our FY2012-13E EPS
by 4-10% mainly due to lower licensing income. Though performance has been
muted YTD, we believe the core biopharma business remains healthy with growth
drivers intact. Maintain BUY with target price at Rs380 (was Rs390).
Total sales at Rs5 bn, up 13% yoy on a like-to-like basis, lower than our estimates
We look at total sales excluding licensing income due to inherent volatility in reporting of licensing
income. Total sales ex-licensing were up 13% yoy and 3% qoq to Rs4.9 bn, 9% lower than our
estimates. Contract research showed strong growth at 20% qoq for the fourth quarter in a row, in
line with our estimate. However, biopharma sales excluding licensing income at Rs3.76 bn grew
only 6% yoy, down in Dollar terms and 12% below our estimates, and was the main reason for
the disappointment. The company attributed this to diversion of capacities towards batch supplies
for early clinical trials of insulin lispro and aspart.
PAT at Rs848 mn, 13% below our estimates of Rs979 mn
Lower biopharma sales was the main reason for the PAT miss of 13%. EBITDA margin adjusting
for Rs100 mn one-off expenses (promotional spend towards launch of insulin pen device in India)
was at 28.6%, flat qoq, in line with our estimates. Gross margin expanded by 200 bps qoq despite
no sequential growth in biopharma sales. We believe the one-off expenses and lower biopharma
sales due to diversion of capacities shaved off Rs150 mn from PAT (see Exhibit 2).
We reduce FY2012-13E EPS by 4-10%; our FY2013E estimates in line with numbers reported YTD
We reduce our FY2012-13E EPS by 4-10% primarily on account of (1) lower licensing fees at
US$25 mn versus US$40 mn earlier against US$17 mn reported YTD, and (2) lower margin
assumption at 29%-29.5%, down 60 bps yoy and in line with margin reported YTD. We estimate
sales ex-licensing to grow at 17% in FY2012E (see Exhibits 3 and 4) versus 17/15% growth seen in
FY2011/9MFY12 and 20% in FY2013E due to higher Rupee assumptions.
We maintain BUY with TP at Rs380 (was Rs390), 16X core FY2013E EPS
In 9MFY12, muted reported PAT growth is due to (1) recognition of lower licensing income
leading to PAT contribution of Rs140 mn in 9MFY12 versus Rs700 mn in 9MFY11. We have
reduced our FY2013E licensing income estimates accordingly, and (2) excluding licensing income,
PAT from biopharma and research has grown significantly to Rs2.2 bn from Rs1.7 bn, up 29% yoy
partly due to turnaround in Syngene. Excluding contract research, PAT growth was 17% in
1HFY12, however, dipping in 3QFY12 due to one-time expenses and lower biopharma sales. We
expect biopharma sales to pick up in FY2013E on account of (1) stable statin sales, (2) Fidaxomicin
supplies, and (3) higher insulin supplies which were affected in 1Q/3QFY12.
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