Sell Biocon; target of Rs 320: ICICI Securities

ICICI Securities's research report on Biocon

Biocon’s Q2FY26 revenue growth of 19.6% YoY was driven by recent launches like bUstekinumab, bAspart, bBevacizumab and bAflibercept, and the launch of generic liraglutide. Despite these launches, its gross margin fell 127bps YoY, indicating profitability in the newly-launched product may not be high, though operating leverage boosted EBITDA margin by 281bps YoY. Biocon is repaying its structured debt holders from the QIP proceeds of INR 45bn. However, net debt of Biologics still stands at USD 1.1bn. Repayment of structured debt may help the group save interest cost of INR 3bn p.a. from Q3FY26. In the near term, revenue growth may remain elevated due to launch of bDenosumab and generic semaglutide. Raise FY26/27E EBITDA by ~2-4% to factor in higher growth in biologics. Retain SELL with a higher TP of INR 320.

Outlook

We retain SELL on Biocon with SoTP-based higher TP of INR 320 (earlier INR 270)..