MOSL: BIOCON (Neutral)-In-line results-key approvals awaited in CY18
Biocon: In-line results; key approvals awaited in CY18
(BIOS IN, Mkt Cap USD3.6b, CMP INR607, TP INR600, 1% Downside, Neutral)
- Biocon’s (BIOS) 3QFY18 results were largely in line with our estimates. Revenue grew by a muted 1.3% YoY to INR10.6b (0.7% beat), which can be ascribed to (i) pricing pressure and channel consolidation in the US, and (ii) requalification activity that led to production disruption and supply constraints. EBITDA declined ~20% YoY (+21.7% QoQ) to INR2.2b (0.5% beat). EBITDA margin contracted 548bp YoY (+215bp QoQ) to 21%, led by higher raw material cost (up ~500bp YoY as % of sales) and employee cost (up ~300bp YoY) due to commercialization of the Malaysian facility. PAT of INR919m (9% miss) was impacted by lower other income and a high tax rate.
- Mixed performance; expect pick-up in Biologics from 4Q: Branded formulation business showed a smart recovery (+27% YoY), driven by strong growth in the UAE and India. Biologics segment was impacted mainly by shutdown at a plant. BIOS expects growth to pick up led by re-commissioning of the plant and ramp-up of key launches like Trastuzumab in Brazil. Small molecules biz was impacted by pricing pressure in the US. Recovery in research services business continued. Syngene business (37% of sales) grew 17% YoY.
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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