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Biocon – Growth stagnant

July 18, 2008

Biocon’s revenues for the quarter were at INR 2,639 mn showing a de-growth of 2.5% (on a like to like basis the revenues have increased by 7%), EBITDA has gone down by ~25% to INR 576 mn. Net profit for the quarter was INR 150 mn.

Biocon had no licensing income in this quarter and hence the EBITDA margins at 21.8% were significantly lower than 28.2% in Q1FY08 and 31.1% in Q4FY08. Adding to the company’s woes was MTM forex loss of Rs 255mn. Other income of INR 126 mn was at INR 14 mn for Q1FY08.

Licensing income is going to be uneven across the quarters hence in the next few quarters as the company records licensing income, the performance of the next three quarters would be better than 1QFY09. We believe lack of revenue growth in contract research services is a cause of concern. The revenues from this segment have stagnated over the last 6 quarters or so.

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