Result Update on Biocon

Result Update on Biocon

Biocon : Performance in line; Shoring up R&D
Reco : Buy    Cmp : 266    Target : 295

BioconⳊQ2 revenue (Rs 5.9 mn; up 18% YoY) and adjusted PAT (Rs 875 mn; up 2% YoY; adjusted for Rs 190 mn forex loss and Rs 306 mn one-time income) were in line with our estimates. EBITDA margin (ex-licensing income), at 23%, was up 221 bps YoY. Growth and margin expansion were largely driven by currency benefits (50% of growth contributed by weak rupee). R&D cost has gone up 40% YoY to Rs 429 mn (7% of revenue) led by clinal trial cost of rh-insulin in Europe. As more projects advance in clinical trials, we expect R&D cost to go up further.