Buy Biocon; target of Rs 380: Axis Direct

Axis Direct's research report on Biocon

EMA’s Committee for Medicinal Products for Human use (CHMP) has asked Biocon to withdraw its Peg-filgrastim and Trastuzumab filings in EU post the recent inspections by European Regulatory authorities. While the drug substance facilities were approved, it highlighted the need for re-inspection of Biocon’s drug product facilities. Biocon states it is on track to complete CAPA^ by end of this quarter (Sep’17) and would seek re-inspection and re-submission thereafter.

Outlook

We maintain estimates and BUY rating but cut multiple to factor in higher regulatory headwinds. Our revised TP is Rs 380 (32x FY19 EPS) vs. Rs 450 (38x FY19E EPS) earlier.