Mehabe score: 3 G Factor: 4 Piotski Score: 6 The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 6.
Description
Biocon is engaged in the business of manufacture of biotechnology products and research services.(Source : 202003-01 Annual Report Page No:195)
Main Points
Biologics (31% of sales)
Has one of the largest biosimilar pipelines comprising 28 molecules to be launched over the next decade. #
Only Indian company to get FDA approval for 3 biosimilar molecules (Trastuzumab, Pegfilgrastim and Insulin Glargine)Site:BIOCONMain Symbol:BIOCON
Stock trades at 403.0, above its 50dma 398.37. It also trades above its 200dma 400.21. The stock remains bullish on techicals
The 52 week high is at 487.75 and the 52week low is at 363.25
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– Stock is trading at 6.34 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 11.31% for last 3 years.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 32.3x. Biocon trades at the industry’s max P/E of 72.56x. BIOCON trades at a P/E of 72.6x
– Industry’s mean G-Factor is 1.9 while the mean Piotski score is 9.0. BIOCON has a G-Factor of 4 and Piotski scoreof 6.
– Average 1 month return for industry is 0.4%. The max 1- month return was given by Torrent Pharma.: a return of 3.78 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 1761.0 cr compared to Rs 1694.0 cr for period ended Jun 2020, a rise of 4.0%
Operating Profits reported at Rs 333.0 cr for period ended Jun 2021 vis-vis 410.0 for period ended Jun 2020 .
Operating Margins contracted -529.3 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 0.7 compared to Rs 2.11 for previous quarter ended Mar 2021 and Rs 1.24 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 7198.0 cr for period ended TTM vis-vis sales of Rs 7106.0 cr for the period ended Mar 2021, a growth of 1.3%. The 3 year sales cagr stood at 9.3%.
Operating margins shrank to 21.0% for period ended TTM vis-vis 22.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs 675.0 cr for period ended TTM vis-vis sales of Rs 740.0 cr for the period ended Mar 2021, falling 9.6%.
Company reported a poor Net Profit CAGR of -9.3% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 10.0% compared to 11.0% over the last 3 Years. – The stock has given a return of -6% on a 1 Year basis vis-vis a return of 12% over the last 3 Years. – The compounded sales growth on a TTM bassis is 10% vis-vis a compounded sales growth of 20% over the last 3 Years. – The compounded profit growth on a TTM basis is 3% vis-vis a compounded profit growth of 30% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 15.91% vis-vis 16.3% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 15.02% vis-vis 14.96% for Mar 2021
Conclusion
– – Stock is trading at 6.34 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 11.31% for last 3 years.
– might be capitalizing the interest cost
The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
Technically, the stock remains above its 50 DMA 398.37 and is trading at 403.0, thus bullish price action wise.
