MOSL: BIOCON (Neutral)-A decent quarter; Biologics traction to get stronger with launch in US market
Biocon: A decent quarter; Biologics traction to get stronger with launch in US market
(BIOS IN,Mkt Cap USD5.1b, CMP INR587, TP INR625, 7% Upside, Neutral)
- Healthy sales growth, lower R&D spend drive earnings: BIOS' revenue grew 20% YoY to INR11.2b (est. of INR11.9b), led by strong growth in Biologics (22% of sales) and Research Services (36% of sales) businesses. EBITDA margin expanded ~60bp YoY (+130bp QoQ) to 21.2%, led by a marginal improvement in the gross margin and lower R&D spend. However, the benefit of lower R&D spend was offset to some extent by higher other expenses (10.1% of sales in 1QFY19 v/s 8.6% in 1QFY18). Accordingly, EBITDA increased ~23% YoY to INR2.4b (est. of INR2.6b). Improved business performance, coupled with higher other income and a lower tax rate, led to 48% YoY growth in PAT to INR1.2b (est. of INR1.4b). Higher other income is on account of forex gain of INR390m. Adjusting for the same, PAT stands at INR1.1b (+35% YoY).
- Biologics and Research Services drive revenue growth: BIOS continues enjoying robust traction in Biologics (+33% YoY), with higher sales of biosimilars in the emerging markets and increased market share in the Insulin portfolio. Research Service also exhibited strong growth (+39% YoY), supporting the overall performance. Branded Formulations (13% of sales) grew strongly in India on a low base. Small molecules business (36% of sales) grew moderately by 10% YoY for the quarter. BIOS has filed several DMFs, which would aid growth in this segment, going forward.
Biocon is an Indian biopharmaceutical company. Through its subsidiaries, Co. manufactures biotechnology products and is engaged in research and development in biotechnology. Co. provides a range of products from fermentation derived small molecules to recombinant proteins and antibodies. It has developed and taken a range of novel biologics, biosimilars, differentiated small molecules and recombinant human insulin and analogs from 'Lab to Market'. In research services, Co., through Syngene International Limited, is engaged in the business of custom research in drug discovery while the other subsidiary Clinigene International Limited (Clinigene) is engaged in clinical development.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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