Neutral Biocon; target of Rs 385: Motilal Oswal

Motilal Oswal's research report on Biocon

Dr. Christiane Hamacher has stepped down as MD as well as from the board of Biocon Biologics (BB) effective 20 Jan’21, due to professional differences with the chairperson on strategic priorities and the vision for BB. Dr. Kiran will assume the position of Executive Chairperson at BB. Dr Arun Chandavarkar will be the new MD and CEO for the next two years. n Biocon (BIOS) delivered lower-than-expected 3QFY21, largely weighed by: a) decline in Generics sales, and b) slower ramp-up in Biosimilars off-take due to COVID-19. It continues to build a product pipeline of Biosimilars/Generics. n We lower our FY21E/FY22E/FY23E EPS estimate by 16%/12%/7%, factoring in a delay in: a) approvals for Biosimilars, b) award of tenders in emerging markets, c) gradual build-up of insulin Glargine business and reduced operating leverage. We value BIOS at 34x 12 months forward earnings to arrive at our price target of INR385/share (from INR430 earlier). We maintain our Neutral stance as current valuations adequately capture potential Biosimilar-led upsides in earnings.

Outlook

We value BIOS at 34x 12 months forward earnings to arrive at our price target of INR385/share. Maintain Neutral given the limited upside from current levels.

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