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Informist, Tuesday, Aug. 5, 2025
 

By P. Madhu Kumar

MUMBAI - Biocon Ltd. is expected to report a steep year-on-year decline in consolidated net profit for the June quarter, dragged by a high base in biologics, reduced gRevlimid supplies in generics, and weak margin contribution from contract manufacturing. Sequentially too, the company may see a sharp fall in earnings due to normalisation of one-off gains in the preceding quarter and shrinking US revenue in generics.

The average of estimates from four brokerage houses pegs Biocon's consolidated net profit for June quarter at INR 991.5 million, down 85% from INR 6.60 billion a year ago and 71% lower from INR 3.45 billion in the preceding quarter. Consolidated net revenue is seen at INR 39.66 billion, up 15.5% on year from INR 34.33 billion, but down 10.2% from INR 44.17 billion in Jan–Mar.

Nuvama Wealth Management is the most bullish on net profit with an estimate of INR 1.21 billion, citing growth across biosimilars, generics and research services. Kotak Institutional Equities has the lowest PAT estimate at INR 686 million, factoring in a sharp sequential fall in gRevlimid sales and margin pressure in contract services. On revenue, Motilal Oswal is at the top with INR 42.41 billion, while JM Financial has the lowest forecast at INR 37.45 billion, citing normalisation in biologics sales post a high base.

Brokerages expect Biocon's biologics segment to record low to mid-teens growth year-on-year, helped by incremental gains from launches like Stelara biosimilar. However, the ramp-up is likely to be gradual, with no new exclusivity products in the quarter. Motilal expects biologics revenue to rise 31% YoY on a low base and wider product uptake. Kotak, sees 12% growth in biosimilars to $279 million, due to normalising market share in key products and the absence of Penicillin-G sales.

In the generics segment, the performance is seen mixed. While Motilal Oswal models a 37% YoY growth driven by new launches including Liraglutide in the UK, Kotak forecasts 18% year-on-year rise but a 26% sequential drop due to lower gRevlimid contribution. Nuvama also builds in modest mid-single digit growth in constant currency terms. Overall, generics' contribution is expected to remain stable year-on-year but lower from the March quarter levels.

Research services through Syngene are expected to show healthy traction, with 8–11% YoY growth led by strong demand in research and contract development and manufacturing organisation verticals. However, this may not be sufficient to offset weakness in the generics segment sequentially.

Margins are likely to contract both year-on-year and sequentially, primarily due to less favourable product mix and operating deleverage. Average EBITDA estimate stands at INR 8.19 billion, down 53% on year and 27% from the March quarter. Kotak expects EBITDA to rise 32% year on year but drop sharply on quarter due to lower gross margins and higher fixed costs. Motilal Oswal and Nuvama also expect margin compression despite top line growth, with EBITDA margins likely at 19–21.5%. During the year-ago

quarter, the company reported an EBITDA margin of 38% and a core EBITDA margin of 26%.

Finance costs and depreciation are expected to remain largely stable, though elevated compared to prior quarters due to earlier capex and debt-funded acquisitions. These are unlikely to significantly impact bottom line, which is mainly driven by core operating trends.

Despite a healthy revenue growth year-on-year, the likely sharp contraction in PAT highlights a challenging quarter for Biocon, with a disproportionate drop in profitability pointing to margin headwinds and a difficult generics environment. The quarter marks a reset from the strong finish in March, and management commentary on biologics momentum and pipeline visibility will be key ahead.

Investors will closely track the management's outlook on biosimilars, particularly updates on Stelara ramp-up and guidance for newer launches in regulated markets. Commentary on the sustainability of growth in Syngene and visibility in CDMO deals will also be key. On the generics front, clarity on the outlook for gRevlimid and Liraglutide supply momentum will be closely watched, along with any cues on new product filings.

Out of the 12 brokerage reports available on the company with Informist, nine brokerages have a ‘buy' or equivalent rating with a target price of INR 404. Only one brokerage has a ‘hold' rating while the remaining two brokerages have a ‘sell' rating.

Tuesday, shares of the company closed 2.6% lower at INR 372.35 on the National Stock Exchange.

Following are the Apr-Jun earnings estimates for Biocon based on reports from four brokerages, in descending order of the estimate of net profit in INR million:

End

Edited by Vandana Hingorani

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