ICRA has reaffirmed the 'AA+' rating outstanding on the Rs 200 million fund based facilities and Rs 270 million non-fund based facilities of Biocon. The outlook on the long term rating is stable. ICRA has also reaffirmed the 'A1+' rating outstanding on the Rs 2.03 billion (inter fund based changeable) facilities of Biocon.    

The reaffirmation in ratings continues to take into account Biocon's strong business profile with an integrated presence spanning research and development (R&D), manufacturing and marketing, the company's comfortable financial position and its diversified revenue stream. Biocon's business remains fairly distributed across segments such as small molecules, biosimilars, branded formulations and research services.

However, the company's revenues over the past few years have been driven by the strong traction under its domestic branded formulations and research services businesses. The ratings also take into account Biocon's product specific co-development / marketing partnerships with global players (such as Bristol Myers Squibb and Mylan Inc) which enhances revenue growth prospects for the company given strong product development capabilities and marketing network of its partners in the regulated markets.

Biocon's financial profile remains strong marked by healthy margins, sound capital structure, strong debt protection metrics and comfortable liquidity position (as reflected by large cash and liquid investment balances of Rs 10.49 billion as on Dec. 31, 2013).

While Biocon has outlined aggressive capital expenditure in the near term, we expect the company to maintain its credit profile supported by strong accruals and existing reserves. The ratings continue to take into account high competitive intensity in the small molecules as well as domestic branded formulations segment restricting growth to some extent.

While the company's product pipeline under biosimilars is expected to drive growth, the same is unlikely to be in the near term given large investment requirements and the still evolving regulatory pathway for biosimilars.

Shares of the company gained Rs 41.5, or 9.13%, to settle at Rs 496.10. The total volume of shares traded was 1,407,929 at the BSE (Monday).