Motilal Oswal has given Neutral recommendation for Biocon with a target price of Rs. 360 in its research report issued on Dec 06, 2021
Motilal Oswal’s research report on Biocon
We recently met with BIOS’ management to understand its business outlook in greater detail. Here are the key takeaways: After two years (FY20/FY21) of earnings decline, BIOS is well-positioned to revive earnings growth meaningfully. In addition to steady traction in already launched Biosimilars, BIOS has Insulin Glargine (Semglee) contracts starting 4QFY22. This would be further supported by b-Aspart, subject to regulatory clearance. The recent agreement with the Serum Institute of India (SII) to market its COVID-19 vaccine further increases its business prospects from 2HFY23E onwards. We expect 36% earnings CAGR over FY21-23E, led by Insulin Glargine, scaling up of the Biologics business in emerging markets, and ramp-up in research services. We are yet to factor in the Vaccine business in our estimates. While the earnings outlook remains promising, we maintain our Neutral stance with a TP of INR360 per share (32x 12-month forward earnings) as current valuations factor in an earnings upside over the medium term.
We value BIOS at 32x 12-month forward earnings to arrive at our TP of INR360. We maintain our Neutral rating as current valuations adequately captures in potential upsides from a ramp-up in launched Biosimilars in the US.