Biocon dips 11% in three days on disappointing Sept q results

Shares of Biocon slipped 6.5 per cent to Rs 390 on the BSE on Monday, falling 11 per cent in the past three trading days, after the company reported lower-than-expected performance for the quarter, largely weighed by operational challenges for the quarter ended September 2020 (Q2FY21).
Biocon reported 22 per cent year on year (YoY) decline in its consolidated net profit at Rs 169 crore in Q2FY21 against Rs 216 crore in Q2FY20. Revenue from operations grew 11 per cent at Rs 1,745 crore on YoY basis.

Ebitda (earnings before interest, taxes, depreciation, and amortization) down 8 per cent to Rs 223 crore from Rs 296 crore in the corresponding quarter of previous fiscal. Ebitda margin contracted 482 basis points to 23.32 per cent from 28.14 per cent in the year-ago quarter. The company said profitability was impacted on account of higher R&D expenses, staff costs, other expenses and forex losses.

The management guided for operational issues to be resolved soon and that it should benefit from the increasing demand for its biosimilar products. Around 50 per cent of sales in Biosimilars are from the developed markets and the other half from the emerging markets.

Motilal Oswal Securities cuts EPS estimate by 15 per cent/10 per cent for FY21/FY22, factoring in a delay in the ramp-up of biosimilars (Pegfilgrastim/Trastuzumab) and reduced operating leverage. The brokerage firm maintains ‘Neutral’ on the stock as current valuations adequately capture potential biosimilarled upsides in earnings.

At 02:42 pm, Biocon was trading 4.5 per cent lower at Rs 399 on the BSE, as compared to the 1.5 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped three-fold with a combined 8.6 million equity shares were changing hands on the NSE and BSE.