Biocon's December quarter performance fails to enthuse the street

Biocon logged a modest performance for the quarter ended December with net sales growth of 23% to Rs 634.2 crore and operating profit growth of 19% to Rs 150 crore. At 23.6%, the company's operating margin dropped 75 bps over the same quarter previous year.

According to the company's management, the company has performed well across all business verticals - especially its biopharma and contract research services business. The company has gained market share in case of its bio similar insulins in the rest of the world markets. Its contract research business has also performed well logging 34% growth in the first nine months of the fiscal.

The company has received marketing authorization from DCGI for AlzumabTM, its novel anti-CD6 biologic (Itolizumab) indicated for psoriasis. The company continues to remain in discussions with potential partners for taking its insulin and novel portfolio to the global markets. A new partnership will play a critical role in the company's performance.

The Street is not much enthused with the company's performance. While the stock closed 1.5% up today, most analysts have a reduce or a hold call on the stock. Avendus in its report on the company's performance expects margins to continue to remain weak on account of increased spend on R&D. Following the results, SBI Caps has given a reduced call on account of muted core earnings due to margin headwinds and high tax, slow progression in the Statin business and potential delay in monetising insulin/ MAbs opportunities beyond F15.