IGI Logo

Viatris integration propels numbers; focus on Hulio launch, pending queries..

About the stock: Biocon mainly operates in biologics (biosimilars), small molecules (generics), branded formulations and contract research (Syngene). Biocon Biologics (BBL), a subsidiary of Biocon, entered into an arrangement to acquire Viatris’ biosimilars assets for US$3.34 billion.

• Biosimilar US pipeline: (approvals - bPegfilgrastim, bTrastuzumab, bGlargine, bAdalimumab)

• In generics, among the world’s largest manufacturers of immunosuppressant and statin APIs

• Revenue breakup Q4FY23: Biosimilars (56%), Generics (18%), CRAMS (26%)

Q4FY23 Results: Beat across the board driven by biosimilars.

• Revenues grew 56.7% YoY to | 3773.9 crore

• EBITDA margins improved 185 bps YoY to 26.4%. Overall EBITDA improved 68.5% YoY to | 997.3 crore

• Adjusted PAT came in at | 313.2 crore

What should investors do? Biocon’s share price has de-grown at 7.5% CAGR over the past three years.

• We maintain HOLD as we monitor the progress on biosimilar Hulio launch (Q2) and other pending compliance outcomes (bBevacizumab and bAspart) besides progress on debt reduction

Target Price and Valuation: We value Biocon at | 235 on an SOTP basis.

Key triggers for future price performance:

• Biosimilars- 1) expected Hulio launch in Q2 (July 1 launch) and competitive scenario, 2) market share gains in existing biosimilars, 3) Semglee ramp up 4) outcome of USFDA classification for bBevacizumab and bAspart

• Generics- 1) expansion beyond fermentation-based APIs, 2) capacity augmentation in immunosuppressants and synthetic APIs and 3) expanding formulations portfolio through vertical integration

• CRAMs - Syngene’s consistent growth in discovery, dedicated, development and manufacturing services

• Potential synergies with acquisition of Viatris biosimilar business

Alternate Stock Idea: Besides Biocon, in formulations space we like Sun Pharma.

• Higher contribution from specialty and strong domestic franchisee

• BUY with a target price of | 1210

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Above views are of the author and not of the website kindly read disclaimer