Biocon extends rally, up 6% in 2 days on HSBC, Motilal Oswal 'Buy' upgrade

Biocon share price: Pharmaceutical company Biocon share price was in demand on Tuesday, January 14, 2025, as the scrip zoomed as much as 4.72 per cent to hit an intraday high of Rs 382.05 apiece, nearing its 52-week high of Rs 395.65.

 

Notably, Biocon share price has surged about 6 per cent in the last two sessions. 

 

The uptick in Biocon share price came after reports suggested that global brokerage HSBC upgraded the stock to ‘Buy’. The brokerage also raised the target price to Rs 430, which reflects an upside of 17.87 per cent from the previous close (January 13) of Rs 364.80 apiece.

 

According to reports, HSBC said that Biocon is well-placed for an operational turnaround, driven by key biosimilar launches and a recovery in generics sales. Additionally, the USFDA's clearance of its Malaysia plant has resolved the GMP compliance concerns.

 

Also Read: Biocon shares gain 4% after USFDA gives VAI tag to its Malaysia unit

 

Similarly, Motilal Oswal, on January 13, 2025, upgraded Biocon to a ‘Buy’ rating with a target price of Rs 430 per share. 

 

The brokerage highlighted that Biocon (BIOS) has achieved 'Voluntary Action Indicated' (VAI) status for its Malaysian site, ensuring that all critical biosimilar production sites are now compliant with USFDA regulations. The development majorly enhances the company's business prospects in the US market.

 

Regulatory compliance at the Malaysian facility opens the door for commercial opportunities for B-Aspart, a product currently facing no biosimilar competition. 

 

While Biocon has faced a considerable earnings decline over the past two years—registering a compounded decline of 50 per cent from FY22 to FY24 due to a lack of US market approvals and increased financial leverage—the company has implemented extensive remediation measures to address regulatory challenges. With compliance now secured for its Biocon Park and Malaysian sites, product approvals and launches are expected to drive growth over the next two to three years.

 

“We expect a 21 per cent Ebitda CAGR over FY25-27. We re-rate the biologics business to 22x 12M forward EV/Ebitda (from 18x earlier) to factor in regulatory compliance. Accordingly, we arrive at an SOTP-based TP of Rs 430 (22x EV/Ebitda for the biologics business, 53 per cent stake in Syngene, 14x EV/Ebitda for the generics business). Upgrade to Buy,” Motilal Oswal said.

 

About Biocon

 

Biocon is among the leading global biotechnology companies, focused on manufacturing innovative biotechnology products and providing research services. The company operates through several business segments, including Biosimilars, Research Services, Generics, and Novel Biologics. 

 

Biocon Biologics, its biosimilars arm, holds a portfolio of 20 biosimilars spanning across critical therapeutic areas such as oncology, immunology, and diabetes, with significant market share in advanced markets. The company also has a robust pipeline of over 20 molecules expected to be launched by 2030. 

 

Syngene, its research services arm, is an independent entity that offers comprehensive discovery, development, and manufacturing services to various industries, including pharmaceuticals, biotechnology, and consumer goods.

 

The company’s generics division specialises in the manufacture of active pharmaceutical ingredients (APIs) with an extensive portfolio of over 50 products, including high-potency molecules. Biocon has made strides in novel biologics, with the introduction of India’s first indigenously produced monoclonal antibody, Nimotuzumab, and Itolizumab for treating psoriasis. 

 

The company continues to expand its manufacturing capacity globally, including a recent acquisition of a US oral solid dosage facility and a biologics manufacturing facility through Syngene. 

 

The market capitalisation of Biocon is Rs 45,184.58 crore, according to BSE. The company falls under the BSE 200 category.

 

At 10:12 AM, Biocon shares were trading 3.17 per cent higher at Rs 376.35 per share. By comparison, BSE Sensex was trading 0.31 per cent higher at 76,569.96 levels.