Reco price/date: Rs 116/May 21;
Current/Target price: Rs 120.4/Rs 147
Motilal Oswal Securities
Reco price/date: Rs 217/May 21;
Current/Target price: Rs 215/Rs 186
Biocon's (BIOS) shares have had an uninspiring run after the termination of the Pfizer deal, which dealt a big blow to its biosimilar insulin aspirations. While the deal is now terminated, it would continue to throw its shadow over future earnings, thanks to an aggressive accounting policy that would see BIOS shift biosimilar insulin R&D costs off the P&L. This, along with use of a creative transaction structure for AxiCorp, leaves analyst frustrated with corporate governance standards in the company, and they have downgraded their accounting and corporate governance rating from amber to red. Stripping out biosimilar insulin (90 per cent valuation haircut) and Dificid, BIOS is currently trading at 12 times FY13 estimated earnings. Espirito has cut its fair value by 47 per cent to Rs 186 (from Rs 350 earlier). Downgrade to sell.
Espirito Santo Securities
Note: Reco price/date refers to the price and date at which the recommendation was made. Target price refers to the fair value of the stock as per the said brokerage