Hold Biocon; target of Rs 436: ICICIdirect

ICICIdirect.com has recommended hold rating on Biocon with a target price of Rs 436, in its research report dated October 27, 2014.

November 04, 2014 / 17:02 IST

26 Aug, 2025 12:21

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ICICIdirect.com's report on Biocon

Revenues grew 2.3% YoY to Rs 758 crore, far below I-direct estimates of Rs 846 crore on the back of below-par biopharma segment growth due to capacity constraints and geo-political challenges in the Middle East. The CRAMs growth was also below expectations

EBITDA margins dropped 90 bps YoY to 22.8%, lower than I-direct estimates of 24.5% due to subdued growth in the high margin CRAMs business. EBITDA in absolute terms was flattish at Rs 173.04 crore, lower than I-direct expectation of Rs 207.1 crore

Net profit remained flat at Rs 102 crore

"Investment by Silver Leaf Oak has valued the contract research business at Rs 3800 crore - 4x FY16E sales and 3.4x FY17E sales. This effectively accounts for 40% of the current market capitalisation. While the biopharma segment continues to struggle for one reason or the other, the only thing that is holding up the stock is contract research segment and the possible listing of the same. Branded formulations continue to impress but their contribution still remains low. We do not see any major trigger in the biopharma space till FY17. Even the Malaysian facility, which will go on-stream for a pilot run, will see commercial launches only at the end of FY17. Our revised target price is Rs 437 based on 17x FY17E EPS of Rs 25.7. The stock remains delicately poised as any cracks in research performance could lead to further downgrades", says ICICIdirect.com research report.