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Motilal Oswal Report
Biocon Ltd. has received ‘voluntary action indicated' for its Biocon Park, Bengaluru. The approvals for these sites were stuck for more than 15 months.
A favorable compliance outcome provides visibility for product approvals, namely b-Bevacizumab and b-Ustekinumab. Further, the VAI classification for this park provides a boost to the Liraglutide opportunity as well. While VAI is positive for Biocon, competition has intensified in some products over the past two years.
Biocon's earnings declined significantly over the past two years (50% compounded decline over FY22-24), led by the lack of potential approvals for the U.S. market and increased financial leverage. With compliance in place for Biocon Park, we expect product approvals/launches to boost the company's growth outlook over the next two-three years.
Accordingly, we maintain our Neutral stance on the stock, as the current valuation captures the earnings upside.
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