Biocon reports 16.0% Net Income growth and 7.4% Revenue growth

30-04-2015 • About Biocon ($BIOCON) • By InTwits

Biocon reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Biocon has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.6%. At the same time it's in pair with industry average of 19.0%.
CAPEX is quite volatile: 8,381 in FY2015, 7,885 in FY2014, 3,586 in FY2013, 2,745 in FY2012, 1,890 in FY2011
The company has highly profitable business model: ROIC is at 12.2%
It operates with high leverage: Net Debt/EBITDA is 0.1x while industry average is 0.0x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Biocon ($BIOCON) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	17,898	20,490	24,853	28,773	30,898	7.4%
EBITDA	5,270	5,187	5,701	7,398	7,300	-1.3%
Net Income	3,675	3,384	5,089	4,287	4,974	16.0%
Balance Sheet
Cash	2,984	2,836	4,735	5,564	9,366	68.3%
Short Term Debt	2,474	1,873	1,033	2,435	2,610	7.2%
Long Term Debt	658	698	1,640	6,062	7,696	27.0%
Cash flow
Capex	1,890	2,745	3,586	7,885	8,381	6.3%
Ratios
Revenue growth	-50.0%	14.5%	21.3%	15.8%	7.4%
EBITDA growth	9.4%	-1.6%	9.9%	29.8%	-1.3%
EBITDA Margin	29.4%	25.3%	22.9%	25.7%	23.6%	-2.1%
Net Income Margin	20.5%	16.5%	20.5%	14.9%	16.1%	1.2%
CAPEX, % of revenue	10.6%	13.4%	14.4%	27.4%	27.1%	-0.3%
ROIC	15.3%	13.5%	13.9%	15.4%	12.2%	-3.3%
ROE	19.4%	15.7%	20.5%	15.0%	15.8%	0.8%
Net Debt/EBITDA	0.0x	-0.1x	-0.4x	0.4x	0.1x	-0.3x

Revenue and profitability

Biocon's Revenue increased on 7.4% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.3 pp from 14.2% to 23.5% in FY2015.

Net Income marign increased slightly on 1.2 pp from 14.9% to 16.1% in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 27.1% in FY2015. The company's CAPEX/Revenue surged on 13.7 pp from 13.4% in FY2012 to 27.1% in FY2015. For the last three years the average CAPEX/Revenue was 23.0%.The company maintained rich investment policy and has spent a lot to CAPEX (115% of EBITDA).

Return on investment

The company operates at good ROIC (12.16%) and ROE (15.80%). ROIC decreased on 3.3 pp from 15.4% to 12.2% in FY2015. ROE increased slightly on 0.81 pp from 15.0% to 15.8% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 0.1x and Debt / EBITDA is 1.4x. Net Debt / EBITDA dropped on 0.3x from 0.4x to 0.1x in FY2015. Debt jumped on 21.3% in FY2015 while cash surged on 68.3% in FY2015.

Management team

Arun Suresh Chandavarkar is a Biocon's CEO. Arun Suresh Chandavarkar has spent 4 years at the company. Siddharth Mittal is a Biocon's CFO. Siddharth Mittal has spent 4 years at the company.

Appendix 1: Peers in Biotechnology

Below you can find Biocon benchmarking vs. other companies in Biotechnology 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, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Panacea Biotec ($PANACEABIO)	42.0%	-39.0%	-22.2%	-6.1%
Median (1 company)	42.0%	-39.0%	-22.2%	-6.1%
Biocon ($BIOCON)		14.5%	21.3%	15.8%	7.4%

Top companies by EBITDA margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Panacea Biotec ($PANACEABIO)	23.8%	-7.1%	-9.1%	-13.6%
Median (1 company)	23.8%	-7.1%	-9.1%	-13.6%
Biocon ($BIOCON)	29.4%	25.3%	22.9%	25.7%	23.6%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Panacea Biotec ($PANACEABIO)	6.5%	19.3%	14.7%	11.0%
Median (1 company)	6.5%	19.3%	14.7%	11.0%
Biocon ($BIOCON)	10.6%	13.4%	14.4%	27.4%	27.1%

Top companies by ROIC, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Panacea Biotec ($PANACEABIO)	12.6%	-7.5%	-8.0%	-8.7%
Vivo Bio Tech ($VIVOBIOT)	7.4%	11.4%	4.0%
Alpa Laboratories ($ALPA)		1.9%	-1.6%
Saamya Biotech (India) ($SAAMYABIO)	1.1%	1.6%	-1.1%
Median (4 companies)	7.4%	1.7%	-1.4%	-8.7%
Biocon ($BIOCON)	15.3%	13.5%	13.9%	15.4%	12.2%

Top companies by Net Debt / EBITDA


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Vivo Bio Tech ($VIVOBIOT)	5.6x	3.9x	-2.8x	0.0x
Alpa Laboratories ($ALPA)	4.8x	3.4x	4.6x	0.0x
Median (2 companies)	3.9x	3.4x	0.9x	0.0x
Biocon ($BIOCON)	0.0x	-0.1x	-0.4x	0.4x	0.1x

Biocon stock price chart

Biocon financials

mln.	FY2010	FY2011	FY2012

Revenue	35,814	17,898	20,490
EBITDA	4,817	5,270	5,187
Net income	2,932	3,675	3,384
CAPEX	1,670	1,890	2,745
Debt	5,136	3,132	2,571
Cash	1,399	2,984	2,836

About Biocon

Biocon Limited develops and sells biotechnology products for the pharmaceutical sector in India and internationally. It offers active pharmaceutical ingredients, including cardiovascular agents, anti-obesity agents, immunosuppressants, opthalmics, peptides, oral anti-diabetic agents, anti-inflammatory agents, hepatoprotective agents, and probiotics; and biosimilars comprising human insulin, insulin glargine, insulin lispro, insulin aspart, erythropoietin, filgrastim, streptokinase, and monoclonal antibodies. The company also provides branded formulations in the areas of diabetology, oncotherapeutic, nephrology, cardiology, immunotherapy, comprehensive care and bioproducts; and out-licensing services. In addition, it offers contract manufacturing services, including mammalian cell culture fermentation, microbial cell culture fermentation, and synthetic chemistry to small-to-medium sized pharmaceutical and biotech companies; undertakes clinical research activities on discovering new biomarkers; and provides integrated contract research services to support discovery and development, for small and large molecules. The company was founded in 1978 and is headquartered in Bengaluru, India.