'Buy' Biocon Shares Maintains Motilal Oswal Despite EPS Dilution; Sees Upto 20% Upside

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Motilal Oswal Report

Biocon Ltd. is fully integrating Biocon Biologics by acquiring the remaining stake of 23.3%. In addition to the share swap, Biocon is raising additional capital through a QIP of up to Rs 45 billion, subject to shareholder approval, for the cash component payable to Viatris.

The deal will eliminate the minority interest as Biocon Biologics will become a wholly owned subsidiary of Biocon. However, the addition of equity shares would result in EPS dilution.

Accordingly, Motilal Oswal trims its earnings estimates by 9%/8% for FY27/FY28.

The brokerage values Biocon on SOTP basis (22x 12M fwd EV/Ebitda for biologics business, 53% stake in Syngene, and 10x EV/Ebitda for generics business) to arrive at a target price of Rs 460.

While the equity dilution and QIP process may create a near-term drag on stock price, business prospects remain encouraging on the back of-

1. product launches (namely insulin aspart) in biologics segment and subsequent market share gain,

2. scale-up of generics business, and

3. growth/operating leverage in Syngene business.

Maintain Buy.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.