Buy Biocon; target Rs 313: ICICIdirect.com

ICICIdirect.com is bullish on Biocon and has recommended buy rating on the stock with a target price of Rs 313, in its April 30, 2012 research report.

“Biocon Q4FY12 results were far above our expectations. It registered strong revenue growth of 29.6% YoY to Rs 610.2 crore compared to our expectation of Rs 517 crore, mainly on the back of 1) higher than anticipated growth in the Biopharmaceutical business and 2) licensing income of Rs 46 crore (which we had not anticipated). Biopharma (excluding licensing income & including branded formulations) grew by 28% to Rs 446 crore. EBITDA margins were inline at 25.3% (declined by 240 bps YoY). Marginal increase in the effective tax rate and forex loss of Rs 7 crore restricted net profit growth to 4% at Rs 97.8 crore.”

“We expect Sales, EBITDA and PAT to grow at a CAGR of 18%, 20% and 15% between FY12-14E. The stock delivered negative returns in FY12 not only on account of Pfizer call-off, but also on account of lumpiness of licensing income and policy flip flops. We have rolled forward our estimates to FY14 and accordingly value the stock at Rs 313 i.e.14x FY14E EPS of Rs 22.4. We believe the recent overreaction can be used to accumulate the same. We maintain BUY rating on the stock with a target price of Rs 313,” says ICICIdirect.com Research report.

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