Sell Biocon; target of Rs 270: ICICI Securities

ICICI Securities's research report on Biocon

Biocon’s Q1FY26 performance was marred by operating cost of new facilities for generic division and lower-than-anticipated margins in biologics division. Biologics segment delivered healthy 18% YoY growth, mainly led by the launch of Yesintek (bUstekinumab) in the US and better traction in Fulphila & Ogivri. It is in the process of launching insulin Aspart and bBevacizumab in the US in the next couple of months which could boost momentum. Biocon is speeding up its investment in GLP-1 opportunity as it is commissioning a new plant in Bangalore. Launch of liraglutide in the US is anticipated in FY26 while semaglutide will be filed across all major markets which could boost generics growth in FY26-27. Cut FY26/27E EBITDA by ~1-2% to factor in lower margins in generics. Retain SELL with an unchanged TP of INR 270.

Outlook

We cut FY26/27E EBITDA by ~1-2% to factor in lower margins in generics. The stock currently trades at 17.0x FY26E and 12.9x FY27E EV/EBITDA. We retain SELL on Biocon with an SoTP-based TP of INR 270 (unchanged).