Accumulate Biocon Ltd For Target Rs.376 By Geojit Financial Services Ltd
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Increasing Demand, Positive Outlook
Biocon Ltd is a biopharmaceutical company that develops therapies for chronic diseases such as autoimmune, cancer and diabetes. The company has developed and introduced novel biologics, biosimilars, differentiated small molecules and affordable recombinant human insulin and analogues.
* In Q2FY25, Biocon's consolidated revenue grew 3.7% YoY to Rs. 3,590cr, primarily driven by strong sales in the biosimilar segment.
* Biosimilar segment saw a 10.8% YoY increase in revenue to Rs. 2,182cr, driven by robust performance in the US, UK, and emerging markets such as South Africa. Biocon received a VAI classification for Biocon Biologics Park , Bengaluru. We believe this will enable Biocon to launch the approved products, thereby improving the growth prospects and earnings visibility for Biocon.
* In contrast, the generics segment experienced a 7.7% YoY decline in revenue to Rs. 624cr, mainly due to pricing pressure in both API’s and formulations. In addition, reduced demand and a planned shutdown at one of the company’s API facilities impacted revenue. However, generics segment showed signs of recovery with the launch of the company’s first GLP-1 generic in the UK.
* Revenue from Syngene, the research services arm, fell 2.1% YoY to Rs. 891cr, but it saw early signs of recovery in its discovery services. This rebound is primarily fuelled by the new pilot project
Outlook & Valuation
Biocon’s Q2FY25 performance remained stable, supported by strong biosimilars that offset declines in generics. Similar trends are expected ahead, with substantial growth projected in the coming years, driven by strategic collaborations, market expansion, and new product launches supported by the recent VAI classification. The Generics and Syngene segments are also poised to grow, benefiting from partnerships, manufacturing advancements and recovery in the US biotech funding. Therefore, we reiterate our Accumulate rating on the stock with a revised target price of Rs. 376 based on 33x FY26E adjusted EPS.
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SEBI Registration Number: INH200000345
