The shares of pharma giant Biocon Ltd plunged 5.96% to ₹301.65 on the BSE following the announcement of poor Q2FY25 results, hooking the attention of market players interested in share market investments.
Quarterly financial performance
Biocon reported a net loss of ₹16 crore, marking a significant reversal from the ₹126 crore profit recorded in the same quarter of the previous fiscal year. Despite the setback, the company's revenue from operations showed modest growth, rising 3.6% to ₹3,590 crore as compared to ₹3,462 crore in the previous year. The company maintained a healthy EBIT margin of 20%, with earnings before interest and taxes reaching ₹718 crore.
Segment performance and strategic developments
The biosimilars segment emerged as a bright spot, with revenues climbing 10.8% to ₹2,182 crore, driven by significant market share gains in US oncology and insulin franchises. However, the generics business continued to face headwinds from pricing pressures and declining demand, further impacted by a planned shutdown of an API facility during the quarter.
In a significant regulatory development, the US FDA classified Biocon Biologics' drug substance facility in Bengaluru as 'Voluntary Action Indicated' (VAI) following a CGMP inspection in February 2024, relating to rh-Insulin drug substance supply to the US market.
Management commentary and future outlook
Biocon Group CEO Peter Bains attributed the quarterly loss to increased tax burden related to geographical profit distribution and minority interest. Group Chairperson Kiran Mazumdar-Shaw maintained an optimistic outlook, emphasizing that the Q2 performance establishes a strong foundation for improvement in the latter half of the fiscal year. She highlighted expectations of enhanced performance across all three business segments, driven by upcoming product approvals and emerging market opportunities. The company's Syngene division is anticipated to gain momentum in the coming quarters, particularly in discovery services and biomanufacturing CMO business.
Stock performance and market position
Despite the quarterly setback, Biocon's stock has demonstrated strong market performance, rising 24.4% year-to-date and 44.7% over the past year, significantly outperforming the BSE Sensex's gains of 10.2% and 24.7%, respectively. With a market capitalization of ₹38,203.09 crore, the company trades at a P/E multiple of 914.85 times and an EPS of ₹0.35. By late morning trades, the stock had recovered significantly from its early losses, trading at ₹318.20, down 0.81%, while the broader market showed weakness with the Sensex declining 0.47% to 79,562.84 points.
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