Buy Biocon; target of Rs 730: ICICI Direct

ICICI Direct's research report on Biocon

Revenues grew 30.7% YoY to Rs 1528.8 crore (I-direct estimate: Rs 1608.0 crore) mainly due to 87.1% YoY growth in biologics to Rs 451 crore (I-direct estimate: Rs 470.0 crore). EBITDA margins improved 644 bps YoY to 26.4% (I-direct estimate: 23.6%) mainly due to strong gross margin performance (68.1% vs. 59.4% in Q4FY18). EBITDA grew 73% YoY to Rs 403 crore against I-direct estimate of Rs 378.8 crore. Adjusted net profit grew 63.9% to Rs 213.7 crore (I-direct estimate: Rs 190.0 crore) mainly due to a strong operational performance and lower tax rate (13.8% vs. 21.6% in Q4FY18).

Outlook

Biosimilar launches in developed as well as emerging markets and Syngene’s performances remain key levers for the company. On an SoTP basis, we ascribe a target price of Rs 730 per share.