Neutral Biocon; target of Rs 400: Motilal Oswal

Motilal Oswal 's research report on Biocon

Biocon (BIOS) delivered lower-than-expected performance for the quarter, largely weighed by operational challenges. It remains on track to a) improve traction in commercialized products and b) build a product pipeline of both biosimilars as well as generics. We cut our EPS estimate by 15%/10% for FY21/FY22, factoring in a delay in the ramp-up of biosimilars (Pegfilgrastim/Trastuzumab) and reduced operating leverage. We continue to value BIOS at 30x 12M forward earnings to arrive at price target of INR400 (from INR450 earlier). We maintain Neutral on the stock as current valuations adequately capture potential biosimilar-led upsides in earnings.

Outlook

We continue valuing BIOS at 30x and roll our TP to INR400 (prior: INR450) on a 12M forward earnings basis. Maintain Neutral.

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