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* Biocon is a globally recognized organization present in advanced therapies for chronic diseases. Over the years, it has leveraged its technology platforms from enzymes to small molecules to proteins and antibodies. The company holds ~71% stake in Syngene International. Syngene provides contract research and manufacturing services in early-stage drug discovery and development to pharmaceutical and biotechnology companies.
* Biocon’s Q3FY20 revenue grew 14% YoY to Rs 1,784cr fuelled by biologics, small molecules and research services businesses. EBITDA increased to Rs 444cr (+17% YoY), while profit after tax declined by 7% YoY to Rs 203cr on account of higher tax.
* Biocon has a rich research pipeline of biosimilars under trials. The management is confident of achieving biologics revenue of US$ 1bn by FY22, through an improvement in market share in biosimilars in the US, Europe and emerging markets. The company has started unlocking value of its biosimilars business with the dilution of a minority stake to True North for a primary equity investment of US$ 75mn, which gives a pre-money equity valuation of US$ 3bn for Biocon Biologics (its biosimilars division). The company is also working on the development of next generation biotech cure for the COVID-19 pandemic.
* Biocon has had a series of volatile swings in a broader range for nearly nine years after its listing in 2004. However, a decisive breakout in 2014 established a strong uptrend which is continuing. It has surged roughly 75 to its record high i.e. 367.80 in the last six years.
* Importantly, it’s has been consistently outperforming the majority of the other pharma heavyweights for the last five years, which shows its strength and it’s currently trading at the record high as well.
* The recent buoyancy in the overall pharma space is indeed an encouraging sign, especially after a prolonged underperformance and indications are now in the favor of trend reversal. Keeping all in mind, we advise accumulating Biocon at current levels(353.95) and adding more on dips around 335. Traders should maintain a close below stop loss of 300 for the target of 440.
Accumulate Biocon Ltd @353.95 and 335 2-3 Months SL 300 Target 440 CMP 353.95
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