Biocon Limited is an Indian biopharmaceutical company based in Bangalore. It was founded by Kiran Mazumdar-Shaw in 1978. The company manufactures generic active pharmaceutical ingredients (APIs) that are sold in approximately 120 countries, including the United States and Europe. It also manufactures novel biologics as well as biosimilar insulins and antibodies, which are sold in India as branded formulations. Biocon’s biosimilar products are also sold in both bulk and formulation forms in several emerging markets.
Biocon is engaged in the business of manufacture of biotechnology products and research services. Syngene International Limited (Syngene) is a publicly listed subsidiary of Biocon, operating in the contract research services space. Biocon and Syngene together employ about 9,200 personnel. The firm, which produces competitive biosimilars, generic medications, and advanced APIs, is India’s largest integrated biopharmaceutical company.
Quarterly Growth Walkthrough
The company’s net revenue from operations for the quarter increased by 36% YoY to ₹3,020 Cr from ₹2,223 Cr in Q3FY22.
The company’s EBITDA reached ₹723 Cr in Q3FY23 compared to ₹537 Cr in Q3FY22, representing a growth of 35% whereas EBITDA margin remains flat at 24%.
The company declared a net profit of ₹140 Cr in the quarter ended December 2022 compared to ₹187 Cr recorded in the year-ago quarter, representing a fall of 25% YoY. Biocon said the profit was also impacted due to dilution of Biocon’s stake in Biocon Biologics and Syngene.
To partially fund the USD 650 million equity infusion into Biocon Biologics, Biocon Ltd. raised USD 420 million in mezzanine financing. With Kotak Strategic Situations Fund, Biocon Limited has signed a legally binding agreement for structured fundraising of up to ₹1200 crore.
Shreehas Tambe will serve as CEO & Managing Director on the board of directors of Biocon Biologics Ltd from December 5, 2022.
Biocon’s consolidated revenues for the quarter grew 36% to ₹3,020 crore on the back of robust performance across all its three businesses.
Biocon has raised funds through a partial divestment of its stake in Syngene to reduce the acquisition debt.
Segment wise performance
The biggest contribution came from the Biologics business, which reported a 54% increase in revenues to ₹1,507 crore.
Research Services revenues at ₹786 crore and Generics business revenues at ₹718 crore, grew 23% and 18%, respectively.
The company’s net R&D investments reached ₹337 Cr in Q3FY23 against ₹138 Cr, representing a YoY growth of 144%.
The company’s income from Generics business stood at ₹718 Cr in Q3FY23 compared to ₹607 Cr, representing a growth of 18%.
Biocon stock price has plummeted down and takes support at the 61.8% retracement level. The price level around Rs 200 has given great support to the stock previously and the stock continues to receive support presently at this level. The price has overextended below the 200-day exponential moving average which marks the stock as extremely oversold. The weekly MFI is at 13 points which indicates that the stock is highly oversold. The entire pharma sector is currently weak but presents an opportunity to accumulate the pharma stocks at an oversold valuation. Biocon is currently oversold and ripe for the picking currently in the perspective of long-term growth. If the price breaks below the 61.8% retracement level, the stock might crash down further.
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