Axis Securities's research report on BioconBiocon posted higher growth of 11% YoY(vs. 3-4% YoY in past) in Biopharma business (67% of revenue), leading to a 390 bps YoY improvement in gross margin.Hence, despite higher R&D expense, 10% of sales (vs. 7/8 % in Q4’15/ Q3’16), EBITDA margin was largely flat at 21%. R&D efforts areon track, as Bioconmaintains to file four Biosimilar products (addressing USD 30 bnmarket) in FY17. We highlight that Biocon’s advancing R&D pipeline and increasing regulatory visibility (which was under-appreciated by the Street) have led the stock appreciate by 23% in past 1 month (after recent approval of its Insulin Glargine in Japan). We largely maintain estimates and BUY rating given its advancing R&D pipeline and increasing regulatory visibility,with a revised TP of Rs 680 (19x FY18E EPS for base business and Rs 130 for Biosimilar pipeline) as we roll forward to FY18. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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