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Biocon plans Rs 1,200 capex over next 3 yrs: Citi

The Bangalore-based biotechnology company expects its revenue will rise 15-18 percent, driven by research services and branded formulations in India.

June 20, 2013 / 08:44 AM IST
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Moneycontrol Bureau

Biotechnology company Biocon has planned a capital expenditure of Rs 1,200 crore over the next three years, according to a research report by Citigroup Global Markets.

The capex will be funded by operating cash flows and funds left over from the terminated deal with Pfizer.

Biocon is expecting a revenue growth of 15-18 percent and margins to remain stable in the medium-term, Citi said, highlighting key takeaways from the Bangalore-based company's presentation at Citi India Investor Conference.

"Research services (Syngene) and branded formulations in India would be the key drivers while low growth in statins (8-10% range) would be a drag on Biopharma growth rates," Citi analysts Prashant Nair and Anshuman Gupta said.

Its research services business is expected to grow 25 percent, helped by new contracts and execution of ongoing business, and the recent rupee depreciation should also help growth rates and margins, the analysts said.

Biocon's revenue in FY13 rose 18 percent year-on-year to Rs 2,538 crore, with the research services (Syngene, Clinigene) business clocking 36 percent growth at Rs 557 crore.

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Meanwhile, Biocon has completed phase III studies for human insulin in Europe and a pre-filing meeting with the regulator is likely to take place in the next two-months. "A launch is possible by FY15/16."

Trials for the US market, however, have yet to begin, the analysts say, adding Biocon is in talks with potential partners for human insulin in regulated markets.

Citigroup has a "buy" rating on Biocon, with a target price of Rs 320 on the stock.

Biocon shares were down 0.2 percent at Rs 275.45 on NSE in afternoon trade.

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