Buy Biocon; target of Rs 400: Sharekhan

Sharekhan's research report on Biocon

Revenues stood at Rs. 3,590 crore, up 4% y-o-y and a 5% rise q-o-q. EBITDA reached Rs. 730 crore, down 1% y-o-y but up 24% q-o-q. PAT stood at Rs. 27 crore, a decline of 84% y-o-y and 97% q-o-q. Demand and pricing challenges, and a scheduled facility shutdown hit quarterly numbers. Biocon entered into exclusive licensing agreements with two leading pharmaceutical companies in the Middle East and Brazil for the commercialisation of GLP-1 products. We see several positive indicators - 1) Debt reduction to lower finance costs, 2) Rising market share of biosimilars following the successful integration of the Viatris business, and 3) growth in the generic API segment, driven by complex peptide launches.

Outlook

As a result, we maintain a BUY rating on the stock. Our target price for Biocon, based on an SOTP valuation, is Rs. 400.