January 30, 2017 / 16:18 IST
Centrum's research report on Biocon Biocon’s sales grew 29% YoY, driven by biologics, small molecules and research services. The company’s small molecules business (38% of revenues) grew by 27% YoY and biologics (21% of revenues) grew by 56% YoY. The research business (30% of revenues) grew by 19% YoY. We expect further growth in the research business, led by its association with major global clients such as BMS, Abbott, Baxter and Amgen.
OutlookAt the CMP of Rs 1,023, the stock trades at 32.6x FY17E EPS of Rs 31.4 and 25.7x FY18E EPS of Rs 39.9 and 19.0x FY19E EPS of Rs 53.7. We upgrade Biocon to Hold from Sell rating, with a TP of Rs 970 based on 18x Mar’19E EPS of Rs 53.7, and with a downside of 5.2% over CMP. We have revised our FY17 and FY18 EPS estimates downwards by 5% and 8% respectively. We expect the company to deliver superior performance due to the recent approval of insulin glargine in Japan, leading position in rhinsulin and good growth of Syngene International.
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