Prashant…..Not only till FY07 but also go beyond till FY02 which you will find attached in Biocon ARs…If you want to go still further then refer IPO prospectus of Biocon filed in 2004 where you will find data till 1999….Its a real treat to study the company :
14 Years’ Average Pure EBITDA margin (excluding forex effect) of 37.35 %….
10 Years’ Average Pure EBITDA margin (excluding forex effect) of 36.50 %….
Post initial low scale (less than 100 cr.) high margin (43 % +) phase, once company went into 30s in EBITDA margins over last 8 years, average pure EBITDA margin (excluding forex effect) is at 33.77 %….
EBITDA’s conversion to Net Cash Generated from Operations has been robust at 14 Years’ average of 79.70 %, 10 Years’ average of 70.78 % and 5 Years’ average at 65.66 %….
Not only that but even EBITDA’s conversion to Free Cash Flows (FCF) is excellent with 5 out of 14 years showing negative FCF with 9 Years’ average positive EBITDA to FCF conversion at 50.72 %
If we go further to look at health of balance sheet over last 14 years, with a Gross Block addition of 920.19 cr., we have a cash surplus of ~106 cr. in the balance sheet.
Now this is the kind of investment opportunities which a long term investor loves to invest….we have a great history in front of us and with the management confident of continuing with this historical parameters of 30 % + margins, promise of low D/E of not more than 0.5 and an investment plan of 1200 cr. over next 3 years —and this too from a management which exhibits great investor friendliness — an example — you have balance sheet published each quarter instead of half yearly requirement…
When I summed up all and looked at the future with just sustenance of 28 % + EBITDA margins, 50 % + EBITDA to OCF conversion, Asset Turn of just 1.1 post stabilisation of CAPEX and derisked business model because of focus on only NMEs, I fail to understand why this stock is still trading at discount to PI Ind. and Divis Lab on EV/EBITDA basis….Over next few quarters I expect majority of shares getting into the hands of pure long term funds and not remaining much with public category as with a free float of only 12.2 % equity capital or 2.44 cr. equity shares, at current market price of 320, only half the amount invested by funds in parent Biocon, can absorb the entire free float of Syngene……study of history of PI Ind as well as Divis Lab is a perfect case study for this as I remember once fund interest picked up, public category shrinked from ~11 % to 7-8 % with a simultaneous rerating in PI ; similarly in Divis, once fund interest picked up, public category shrinked from ~20 % to ~6 % with a simultaneous rerating.
Let’s keep our fingers crossed and hope the anomaly gets corrected soon by Mr. Market.
Rgds.
Discl. – Invested.
Note — This is not a buy/sell/hold recommendation and is just part of a general discussion.
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