Biocon net below estimates; margins squeeze hurts

Biotechnology company Biocon today reported a net profit that fell below expectations in April-June, as higher spend on research and development pulled down margins sharply.

FP Staff December 20, 2014 10:39:17 IST
Biocon net below estimates; margins squeeze hurts

Biotechnology company Biocon today reported a net profit that fell below expectations in April-June, as higher spend on research and development pulled down margins sharply.

The company said its profit after tax in April-June was Rs 79 crore, up about 13 percent year on year, while revenue was Rs 593 crore, up about 28 percent from a year ago.

Biocon net below estimates margins squeeze hurts

On a sequential basis, the company's net profit fell 19 percent, revenue 5 percent and operating profit 11 percent. Reuters

In a CNBC-TV18 poll, analysts on an average had expected the profit after tax to grow 25 percent to Rs 88 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA), or operating profit, rose a measly 5 percent to Rs 138.6 crore, against an estimated 21 percent rise to Rs 148 crore.

On a sequential basis, the company's net profit fell 19 percent, revenue 5 percent and operating profit 11 percent.

EBITDA margins came in at 23 percent, against an expected 26 percent. PAT margins were 13 percent.

EBITDA and net profit margins were largely impacted by increased R&D spend, the company said in a press release.

The company's key biopharma business grew 23 percent on year, branded formulations 52 percent, research services grew 40 percent, the company said.

The growth in biopharma operations was led by oncology, diabetology and comprehensive care.

Its contract research and manufacturing services are handled by subsidiaries Syngene and Clinigene.

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Biocon also said GE Capital Corp would pick up a 7.7 percent stake in the drugmaker's research services unit Syngene for Rs 125 crore.