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Sharekhan Maintains "Buy" On This Midcap Pharma Stock Amid Strong Q3 performance
Sharekhan is bullish on Biocon Ltd, a pharmaceuticals sector midcap stock. The brokerage assigns "Buy" on the stock with a target price of Rs 266/share. According to the given target price by the brokerage, the stock is likely to give a healthy return of 16% if it is purchased at the current market price. Biocon registered strong operating performance in Q3, with revenue growing in strong double digits.
Stock Overview - Current Market Price, 52-Week Low/High, & Returns
The share price of Biocon on NSE last traded at Rs 229.60/share, jumped 1.46% from its previous close. It has given 0.83% positive return in 1 week. It has fallen 2.51% in 1 month and 18.62% in 3 months, respectively. It declined 41.81% in 1 year, 23.19% in 3 months, and 26.28% in 5 years, respectively.
The stock is trading near its 52 week low of Rs 217.35/share, recorded on 24 February 2023. The stock recorded its 52 week high on 25 February 2022 at Rs 395.80/share. It has a market capitalisation of Rs 27,565.78 crore.
Delivered Strong Q3 performance
According to the brokerage, Biocon Limited (Biocon) reported strong Q3FY2023 performance. The company's revenue grew at a strong pace of 35% on account of broad-based growth across key verticals, while higher cost continued to pressurise the profitability, somewhat. Overall revenue grew by 35% y-o-y to Rs. 2,941 crore with 54% growth in biosimilars, 23% in research services, and 18% growth in the generic business. Consolidation of Viatris' biosimilar business to its Biocon biologics' segment will add to growth of the biosimilars business in Q4FY2023; and going forward, it will immensely help in overall revenue growth and expansion in profitability.
Valuation & Key Risks - Maintain Buy with a revised PT of Rs. 266
Sharekhan said, "Consolidation of Viatris' biosimilar business will add to the growth of Biocon Biosimilars in Q4FY2023. Going forward, it will immensely help in revenue growth and expansion in profitability margins."
It added, "We have arrived at a revised price target (PT) of Rs. 266 (earlier Rs. 340). At the CMP, the stock is trading at a reasonably attractive valuation level of 29.7x/16.9x its FY2024E/FY2025E earnings. We maintain our Buy rating with a revised PT of Rs. 266."
According to Sharekhan, the Key Risk is, "Any delay in product approvals or the negative outcome of facility inspection by the USFDA can affect future earnings prospects."
Disclaimer
The stock has been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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