Earnings Outlook
US sales rise, but high base may drag Biocon consol PAT
This story was originally published at 21:02 IST on 28 January 2025
Register to read our real-time news.Informist, Tuesday, Jan. 28, 2025
By Narayana Krishna
HYDERABAD - Despite robust sales growth in the US, the higher earnings base of last year, owing to divestment income, is likely to impact Biocon Ltd.'s December quarter net profit on a year-on-year basis, according to analysts. The Bengaluru-based company's consolidated net profit for the latest quarter is seen falling 84% year on year to INR 1.07 billion, while its revenue is projected to decline 3% to INR 38.19 billion, based on the average estimates of seven brokerages.
In November 2023, Biocon's subsidiary Biocon Biologics Ltd. sold two non-core business assets to Eris Lifesciences Ltd. for INR 3.7 billion, resulting in a higher earnings base. In the corresponding quarter last year, the biopharmaceutical company reported a consolidated net profit of INR 6.6 billion on revenue of INR 39.5 billion.
Analysts' estimates for Biocon's net profit range from INR 715 million--the lowest by Motilal Oswal Financial Services Ltd.--to INR 1.7 billion, the highest by JM Financial Institutional Securities Ltd. Revenue projections range from INR 37.2 billion, the lowest by Motilal Oswal, to INR 38.9 billion, the highest by Kotak Institutional Equities.
Sequentially, the company's revenue is seen rising 6.4%. For Jul-Sept, the company had reported a net loss of INR 160 million on a revenue of INR 35.9 billion. The company is scheduled to announce its Oct-Dec earnings on Thursday.
Most analysts project Biocon's US sales, mainly biosimilar products, to show robust growth led by market share gains for key products, helping the company adjust for the base effect. Kotak Institutional Equities expects Biocon's US biosimilar sales for the latest quarter to grow 5% year-on-year to $272 million, driven by market share gains in key products and traction in emerging markets. Nuvama Wealth Management Ltd. projects this segment's revenue at $265 million, while Motilal Oswal estimates an 11% year-on-year growth.
Axis Securities Ltd. also noted that three of the company's key products are gaining market share in the US. The biosimilar segment contributes nearly 60% of Biocon's total revenue, followed by 23% from contract research services and the remainder from the generics segment.
Most analysts foresee weak numbers in Biocon's generics business for the quarter. Nuvama Wealth estimates an 8% year-on-year decline in this segment's revenue to $78 million, while Motilal Oswal projects a 7% drop, citing price erosion in the US market.
On other hand, analysts are optimistic about Biocon's research services business, expecting a decent growth driven by increased order inflows. While Kotak Institutional Equities projects a 14% year-on-year growth in this segment, Motilal Oswal forecasts an 8% rise to INR 9.2 billion.
Excluding the high base effect, analysts are positive about Biocon's earnings before interest, tax, depreciation, and amortisation margins for the December quarter. Projections for the Oct-Dec EBITDA margin range from 19.5% to 22%. The average EBITDA estimate from six brokerages stands at INR 8.03 billion.
Market participants are closely monitoring the company's commentary on its product launch pipeline, updates on GLP-1 opportunities, and overall growth outlook.
Following are the Oct-Dec earnings estimates for Biocon Ltd. based on reports from seven brokerage firms in the descending order by the estimate of net profit:
Brokerage name | Net Sales | Net Profit | EBITDA |
-------(In INR million)------- | |||
JM Financial Institutional Securities Pvt Ltd | 38,777.00 | 1,692.00 | 8,337.00 |
Kotak Institutional Equities | 38,894.00 | 1,317.00 | 8,353.00 |
Nuvama Wealth Management Ltd | 37,409.00 | 1,268.00 | 8,037.00 |
Axis Securities Ltd | 37,750.00 | 930.00 | 7,870.00 |
PhillipCapital (India) Pvt Ltd | 38,659.00 | 814.00 | 8,317.00 |
Sharekhan Ltd | 38,700.00 | 750.00 | -- |
Motilal Oswal Financial Services Ltd | 37,171.00 | 715.00 | 7,248.00 |
Average | 38,194.29 | 1,069.43 | 8,027.00 |
On Tuesday, shares of Biocon ended at INR 359.90 on the National Stock Exchange, down 2.8% from its previous close. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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