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Over the last few years Sharon Bio-Medicine showed solid growth in fundamentals

06-09-2014 • About Sharon Bio-Medicine ($SHARONBIO) • By InTwits

Sharon Bio-Medicine is an attractive growth stock in Pharmaceuticals industry. Its revenue performance, profitability and financial model stands it out vs. other public companies on the market.

Growth story


Sharon Bio-Medicine showed fast growth in the last financial year. The company's revenue surged on 23.4% in FY2014. EBITDA also increased considerably: 30.2% for the same period.

In the longer period the company showed fast revenue growth of 28.3% from FY2011 to FY2014 annually. EBITDA surged on 28.8% from FY2011 to FY2014 annually.

Sharon Bio-Medicine ($SHARONBIO) financials for the last 5 years

mln. INR FY2010 FY2011 FY2012 FY2013 FY2014
Revenue9,9886,2688,04110,73513,248
Revenue growth, %-37.2%28.3%33.5%23.4%
SG&A, %
EBITDA5747379731,2091,574
EBITDA growth, %28.5%31.9%24.3%30.2%
EBITDA margin, %5.74%11.8%12.1%11.3%11.9%
Net Income223332428537703
Net Income margin, % 2.24%5.29%5.32%5.00%5.31%
 
CAPEX49996621652318
CAPEX/Revenue, %4.99%1.53%7.72%6.07%2.40%
Debt3,4263,4364,6246,4397,254
Cash13126358105
Net Debt/EBITDA5.9x4.6x4.7x5.3x4.5x
 
ROIC, %12.1%12.7%13.9%13.4%14.2%
ROE, %19.2%20.1%19.0%21.6%26.9%

Profitability and return on investment


EBITDA growth was partly attributed to margin expansion. Sharon Bio-Medicine showed EBITDA margin growth of 0.600 pp from 11.3% to 11.9% in FY2014. If we look for the longer period EBITDA margin increased slightly on 0.100 pp from 11.8% in FY2011 to 11.9% in FY2014.

Sharon Bio-Medicine shows attractive ROIC at 14.2% for the last 12 months which assumes stable development model. Three years ago it was a bit lower at 12.7%. It's average level of ROIC for the last three years was 13.8%.

Sharon Bio-Medicine's Net Income margin increased on 0.300 pp from 5% to 5.30% in FY2014. If we look for the longer period Net Income margin didn't change on 0 pp from 5.30% in FY2011 to 5.30% in FY2014.

Sharon Bio-Medicine operates at ROE of 26.9%. It's average ROE for the last three years was 22.5%.

Capital expenditures (CAPEX)


Sharon Bio-Medicine's CAPEX/Revenue was 2.40% in FY2014. CAPEX/Revenue surged on 0.867 pp from 1.53% in FY2011 to 2.40% in FY2014. It's average level of CAPEX/Revenue for the last three years was 5.40%.

Leverage (Debt)


Having such a fast growth profile Sharon Bio-Medicine keeps high debt level at 4.5x Net Debt/EBITDA. This could become a risk fastor if the growth slows down but the company doesn't decrease debt level by that time. In the longer period Sharon Bio-Medicine showed small leverage decline of 0.10x from 4.64x in FY2011 to 4.54x in FY2014.

Peers in Pharmaceuticals


Below you can find Sharon Bio-Medicine benchmarking vs. other companies in Pharmaceuticals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Granules India ($GRANULES)-68.4%37.6%16.9%43.4%
Marksans Pharma ($MARKSANS)-66.6%16.7%23.3%43.3%
Sun Pharmaceutical Industries ($SUNPHARMA)-87.8%39.9%40.4%42.4%
Torrent Pharmaceuticals ($TORNTPHARM)-63.5%22.7%17.7%32.2%
Abbott India ($ABBOTINDIA)-46.4%8.2%8.7%27.3%
 
Median (40 companies)-46.9%16.7%14.8%13.1%
Sharon Bio-Medicine ($SHARONBIO)-37.2%28.3%33.5%23.4%


Top companies by Gross margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top
Dr.Reddy'S Laboratories ($DRREDDY)51.7%52.1%57.4%
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%
 
Median (2 companies)55.5%46.9%26.1%28.7%


Top companies by EBITDA margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Sun Pharmaceutical Industries ($SUNPHARMA)2.9%34.3%40.8%44.3%44.9%
Divi'S Laboratories ($DIVISLAB)11.2%38.1%37.2%38.2%40.2%
Venus Remedies ($VENUSREM)13.8%24.9%25.2%25.6%25.5%
Dr.Reddy'S Laboratories ($DRREDDY)3.0%21.7%25.8%22.9%25.1%
Natco Pharma ($NATCOPHARM)10.2%21.3%21.5%23.2%24.9%
 
Median (35 companies)7.1%16.4%12.8%13.1%14.5%
Sharon Bio-Medicine ($SHARONBIO)5.7%11.8%12.1%11.3%11.9%


Top companies by CAPEX/Revenue, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Granules India ($GRANULES)0.9%5.3%8.8%15.2%24.3%
Dishman Pharmaceuticals & Chemicals ($DISHMAN)16.3%24.3%8.4%10.9%21.6%
Venus Remedies ($VENUSREM)9.4%26.6%23.2%22.2%17.5%
Shasun Pharmaceuticals ($SHASUNPHAR)1.4%4.3%10.4%15.2%15.8%
Natco Pharma ($NATCOPHARM)3.9%20.0%24.4%16.3%14.4%
 
Median (28 companies)2.6%7.4%7.8%7.9%5.8%
Sharon Bio-Medicine ($SHARONBIO)5.0%1.5%7.7%6.1%2.4%


Top companies by ROIC, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Alembic Pharmaceuticals ($APLLTD)27.5%29.1%41.5%
Sun Pharmaceutical Industries ($SUNPHARMA)15.6%18.9%24.8%31.1%35.0%
Marksans Pharma ($MARKSANS)1.5%-25.8%-142.4%34.9%33.8%
Torrent Pharmaceuticals ($TORNTPHARM)26.5%22.3%26.4%30.5%33.2%
Jenburkt Pharmaceuticals ($JENBURPH)33.0%43.6%34.1%29.0%32.4%
 
Median (62 companies)14.3%14.4%14.2%14.2%15.6%
Sharon Bio-Medicine ($SHARONBIO)12.1%12.7%13.9%13.4%14.2%


Top companies by Net Debt / EBITDA

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Ind-Swift Laboratories ($INDSWFTLAB)3.9x4.6x5.5x16.1x19.5x
Shasun Pharmaceuticals ($SHASUNPHAR)3.5x4.5x2.8x4.5x6.0x
Jubilant Life Sciences Limited ($JUBILANT)4.0x5.3x4.0x3.5x3.5x
Kopran ($KOPRAN)6.6x6.0x4.5x3.0x3.0x
Lincoln Pharmaceuticals ($LINCOPH)1.4x3.6x3.8x4.3x3.0x
 
Median (49 companies)1.6x1.6x1.4x1.3x0.2x
Sharon Bio-Medicine ($SHARONBIO)5.9x4.6x4.7x5.3x4.5x


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