Hold Biocon; target of Rs 450: ICICI Direct

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ICICI Direct's research report on Biocon

Q3 revenues grew 5.9% YoY to Rs 1851 crore. Generics sales de-grew 2.7% YoY to Rs 561 crore due to statin APIs portfolio witnessing a muted demand owing to stockpiling by customers in Q1FY21. Biosimilars grew 11.0% YoY to Rs 769 crore. Research Services segment grew 12.6% YoY at Rs 584 crore. EBITDA margins contracted 383 bps YoY to 21.6% mainly due to higher employee, R&D and other expenditure. EBITDA declined 10.1% YoY to Rs 400 crore as against I-direct estimate of Rs 481 crore. Net profit declined 16.9% YoY to Rs 169 crore.

Outlook

We change from BUY to HOLD and arrive at our revised target price of Rs 450 (vs Rs 500 earlier) on an SoTP basis.

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