Buy Biocon; target of Rs 390: ICICI Direct

ICICI Direct's research report on Biocon

Q4FY20 revenues grew 3.4% YoY to Rs 1581 crore (I-direct estimate: Rs 1874 crore) mainly due to 20.8% YoY decline in biologics to Rs 357 crore due to Covid-19 impact. EBITDA margins contracted 621 bps YoY to 20.2% (I-direct estimate: 25.0%) due to a below expected operational performance. EBITDA declined 20.9% YoY to Rs 318.6 crore against I-direct estimate of Rs 467.9 crore. Adjusted net profit fell 42.3% YoY to Rs 123.4 crore (I-direct estimate: Rs 237.1 crore). Delta vis-à-vis EBITDA was due to higher depreciation and tax rate.

Outlook

We arrive at our revised target price of Rs 390 on an SoTP basis. Despite considering the holding company discount, the stock is still offering decent upside at the current level.

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