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Sharon Bio-Medicine reports 433% Net Income decline and 36.7% Revenue decline

29-08-2015 • About Sharon Bio-Medicine ($SHARONBIO) • By InTwits

Sharon Bio-Medicine reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Sharon Bio-Medicine is a company in decline: FY2015 revenue growth was -36.7%, 5 years revenue CAGR was -3.4%
  • EBITDA Margin is quite volatile: -4.1% in FY2015, 11.9% in FY2014, 11.3% in FY2013, 12.1% in FY2012, 11.8% in FY2011
  • Sharon Bio-Medicine has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's in pair with industry average of 8.3%.
  • CAPEX is quite volatile: 109 in FY2015, 318 in FY2014, 652 in FY2013, 621 in FY2012, 96.2 in FY2011
  • The company has unprofitable business model: ROIC is at -5.2%
  • It operates with high leverage: Net Debt/EBITDA is 3.6x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Sharon Bio-Medicine ($SHARONBIO) key annual financial indicators

mln. INR201120122013201420152015/2014
P&L
Revenue6,2688,04110,73513,2488,385-36.7%
EBITDA7379731,2091,574-343-121.8%
Net Income332428537703-2,339-432.6%
Balance Sheet
Cash12635810590-14.2%
Short Term Debt2,0002,6893,6304,3403,018-30.4%
Long Term Debt1,4361,9352,8092,9145,19278.2%
Cash flow
Capex96621652318109-65.8%
Ratios
Revenue growth-37.2%28.3%33.5%23.4%-36.7%
EBITDA growth28.5%31.9%24.3%30.2%-121.8%
EBITDA Margin11.8%12.1%11.3%11.9%-4.1%-16.0%
Net Income Margin5.3%5.3%5.0%5.3%-27.9%-33.2%
CAPEX, % of revenue1.5%7.7%6.1%2.4%1.3%-1.1%
ROIC12.7%13.9%13.4%14.2%-5.2%-19.3%
ROE20.1%19.0%21.6%26.9%-119.9%-146.8%
Net Debt/EBITDA4.6x4.7x5.3x4.5x-4.5x

Revenue and profitability


Sharon Bio-Medicine's Revenue dropped on 36.7% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.4 pp from 1.4% to 4.8% in FY2015.

Net Income marign dropped on 33.2 pp from 5.3% to -27.9% in FY2015.

Capital expenditures (CAPEX) and working capital investments


In FY2015 Sharon Bio-Medicine had CAPEX/Revenue of 1.3%. The company's CAPEX/Revenue decreased on 6.4 pp from 7.7% in FY2012 to 1.3% in FY2015. Average CAPEX/Revenue for the last three years was 3.3%.

Return on investment


The company operates at negative ROIC (-5.19%) and ROE (-119.89%). ROIC dropped on 19.3 pp from 14.2% to -5.2% in FY2015. ROE dropped on 147 pp from 26.9% to -120% in FY2015.

Leverage (Debt)


Company's Net Debt / EBITDA is 3.6x and Debt / EBITDA is . Net Debt / EBITDA dropped on 4.5x from 4.5x to in FY2015. Debt jumped on 13.2% in FY2015 while cash dropped on 14.2% in FY2015.

Appendix 1: Peers in Pharmaceuticals


Below we provide Sharon Bio-Medicine benchmarking against other companies in Pharmaceuticals industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Mangalam Drugs & Organics ($MANGALAM)16.6%-18.2%-2.1%79.8%
Sun Pharmaceutical Industries ($SUNPHARMA)39.9%40.4%42.4%70.2%
Lyka Labs ($LYKALABS)41.9%-25.7%-22.6%68.7%
Marksans Pharma ($MARKSANS)16.7%23.3%43.3%26.8%
Torrent Cables ($TORRCABS)27.5%17.4%-42.9%26.5%
 
Median (41 companies)16.6%14.7%12.6%9.2%
Sharon Bio-Medicine ($SHARONBIO)28.3%33.5%23.4%-36.7%


Top companies by Gross margin, %

Top  FY2011 FY2012 FY2013 FY2014 FY2015
Dr.Reddy'S Laboratories ($DRREDDY)52.1%57.4%57.6%
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%0.0%
 
Median (2 companies)46.9%26.1%28.7%28.8%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Divi'S Laboratories ($DIVISLAB)38.1%37.2%38.2%40.2%37.4%
Hester Biosciences ($HESTERBIO)32.9%
Sun Pharmaceutical Industries ($SUNPHARMA)34.3%40.8%44.3%44.9%29.2%
Natco Pharma ($NATCOPHARM)21.3%21.5%23.2%24.9%26.2%
Dr.Reddy'S Laboratories ($DRREDDY)21.7%25.8%22.9%25.1%23.2%
 
Median (53 companies)16.5%12.9%13.4%15.0%12.1%
Sharon Bio-Medicine ($SHARONBIO)11.8%12.1%11.3%11.9%-4.1%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Claris Lifesciences ($CLARIS)32.5%58.1%42.9%103.1%
Wintac ($WINTAC)22.8%
Hester Biosciences ($HESTERBIO)21.5%
Ipca Laboratories ($IPCALAB)10.3%11.2%8.3%11.6%17.8%
Natco Pharma ($NATCOPHARM)20.0%24.4%16.3%14.4%14.1%
 
Median (31 companies)7.4%8.2%8.3%5.8%6.2%
Sharon Bio-Medicine ($SHARONBIO)1.5%7.7%6.1%2.4%1.3%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Marksans Pharma ($MARKSANS)-25.8%-142.4%34.9%33.8%41.2%
Alembic Pharmaceuticals ($APLLTD)27.5%29.1%41.5%35.7%
Jenburkt Pharmaceuticals ($JENBURPH)43.6%34.1%29.0%32.4%35.3%
Abbott India ($ABBOTINDIA)36.0%29.6%26.9%30.5%34.2%
Divi'S Laboratories ($DIVISLAB)25.6%30.6%30.4%32.3%30.5%
 
Median (63 companies)14.0%13.8%13.6%15.6%13.3%
Sharon Bio-Medicine ($SHARONBIO)12.7%13.9%13.4%14.2%-5.2%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Jubilant Life Sciences Limited ($JUBILANT)5.3x4.0x3.5x3.5x6.4x
Shasun Pharmaceuticals ($SHASUNPHAR)4.5x2.8x4.5x6.0x6.2x
Claris Lifesciences ($CLARIS)1.5x1.9x1.1x1.8x3.2x
Dishman Pharmaceuticals & Chemicals ($DISHMAN)3.7x3.6x2.6x2.3x2.9x
Neuland Laboratories ($NEULANDLAB)4.9x4.2x3.5x2.6x2.6x
 
Median (49 companies)1.5x1.4x1.2x0.3x0.1x


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