Buy Biocon; target of Rs 332: Sharekhan

Sharekhan's research report on Biocon

Biocon’s subsidiary, Biocon Biologics has successfully concluded the transition of the acquired biosimilars business from Viatris in 120 countries, including regulated and emerging countries. Post being completely integrated, Biocon Biologics partnered with Sandoz for the distribution of Adalimumab BS Subcutaneous Injection in Japan. As per media sources, Biocon is planning to spurn off its non-core units to pare down debt. We believe Biocon should bring its net debt to EBITDA to 3x by FY2026E from 6x presently in FY2023. We believe there are many green shoots in the company such as 1) deleveraging the balance sheet, which would reduce finance cost, 2) increase the market share of biosimilars post the successful integration of Viatris business, and 3) pick up in the generic API segment, driven by complex launches.

Outlook

Hence, we upgrade the stock to BUY from Hold earlier. We would like to allot 50% weightage to both SOTP and P/E method to arrive at a PT of Rs. 332 per share.

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