Biocon nears 52-week low, falls 5% after reporting mixed numbers in Q4

Biocon shares were quoting lower for the third straight day, down 5 per cent at Rs 561 in intra-day trade on the BSE, after the company reported mixed numbers for the quarter ended March 2019 (Q4FY19).

In the past three trading days, the stock has slipped 10 per cent, as compared to a per cent rise in the benchmark S&P BSE Sensex. It is trading close to its 52-week low price of Rs 544 on July 7, 2018, on the BSE in intra-day deal.

Biocon posted 30.7 per cent year-on-year (YoY) growth in consolidated revenues at Rs 1,529 crore, were lower than an average analyst's estimates of Rs 1,624 crore.  Net profit jumped 64 per cent YoY at Rs 214 crore, mainly due to higher gross margins and lower tax rate.

Ebitda (earnings before interest, tax, depreciation and amortization) margin improved 644bp at 26.4 per cent in Q4FY19 against 19.9 per cent in Q4FY18, due to a better product mix.

The management said there is likely to be some pressure on Ebitda on account of higher R&D, higher employee cost and other expenses due to higher scalability.

With better visibility, the company has optically accelerated the scalability capex and R&D, which is likely to push related expenses higher in the near term. Biosimilar launches in the developed as well as emerging markets and Syngene’s performances remain key levers for the company, analysts at ICICI Securities said in result update.

“While management indicated lumpiness in QoQ biologics revenues, they expect YoY growth momentum in FY20 similar to last year in biologics and Syngene. However, higher costs and moderation in margins in other large segments (Syngene) led to the guidance for core margins similar to FY19 (ex FX, OI and net R&D). We believe the core margin guidance for FY20 does not derail the upside from biosimilar monetization and should be reflected in earnings over the medium term,” analysts at JP Morgan said in result update.

Meanwhile, the company's board of directors recommended the issue of bonus shares in the ratio of 1:1 i.e., 1 bonus share for every 1 existing share held by the members, as on the record date. The company said it will intimate the "Record date" for determining eligible shareholders entitled to receive bonus shares, in due course.