Biocon scales biosimilars, cuts debt; analysts bullish post Q2 results

MOFSL and JM Financial retained their Buy ratings, while Nuvama upgraded Biocon to Buy from Hold after the company posted a net profit of ₹85 crore in Q2FY26

Brokerages remained bullish on the Kiran Mazumdar-Shaw-led pharmaceutical company Biocon after the company reported a strong September quarter (Q2FY26) performance, driven by healthy growth in its core businesses, scaling of the biosimilar franchise, and continued debt reduction, positioning it for stronger profitability ahead.

 

Motilal Oswal Financial Services (MOFSL) and JM Financial retained their Buy ratings, while Nuvama Institutional Equities upgraded the stock to Buy from Hold after the company posted a net profit of ₹85 crore in Q2FY26, compared with a net loss of ₹16 crore in the same quarter last fiscal year.

 

During Q2FY26, Biocon’s revenue from operations rose 20 per cent year-on-year (YoY) to ₹4,296 crore from ₹3,590 crore in Q2FY25. Core earnings before interest, taxes, depreciation, and amortisation (Ebitda) grew 23 per cent YoY to ₹1,218 crore from ₹992 crore.  Amidst this, Biocon share price were quoted trading at ₹414.80 per share at 10:23 AM on Thursday, up 2.20 per cent from its previous close of ₹405.90 per share on the NSE.

 

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MOFSL: Scaling biosimilar franchise, reducing debt to support stronger profitability

MOFSL analysts maintained their Buy rating, noting that the company has sustained positive YoY revenue growth over the past five quarters, driven by the biologics and generics segments. The Syngene business, however, faced a slight impact due to a high base in the previous year.

 

Valuing Biocon on a sum-of-the-parts (SOTP) basis—22x 12-month forward EV/Ebitda for its 73 per cent stake in Biocon Biologics and 53 per cent stake in Syngene, and 10x EV/Ebitda for the generics business—MOFSL arrived at a target price of ₹480.

 

The brokerage highlighted that following an earnings revival in FY25, Biocon is entering a scale-up phase, with strong earnings growth expected across segments. “Ongoing financial deleveraging is expected to further enhance earnings prospects. Revenue/Ebitda are expected to record a CAGR of 16 per cent over FY25-28, while earnings are expected to compound at a significantly higher rate of 77 per cent, supported by financial deleveraging benefits,” the report said.  ALSO READ | Nazara Tech shares rally despite Q2 loss; What's driving the momentum?

 

MOFSL has trimmed its earnings estimates for FY26/FY27/FY28 by 2 per cent/4 per cent/3 per cent, considering the procedural time required to add Insulin Aspart biosimilar to the formulary list, gradual reduction in interest costs, and R&D spending to bolster the biosimilar and generics pipeline.

JM Financial: Strong Q2; launches rev-up the biosimilars engine

JM Financial retained its Buy rating, citing confidence in Biocon’s prospects owing to biosimilar scale-up, new launches, and balance sheet strengthening. The brokerage revised its FY26/27/28 estimates, factoring in the biosimilar ramp-up, a muted Ebitda trajectory, and higher-than-expected minority payments, and valued the stock using SOTP to arrive at a target price of ₹476.

 

“Structured debt settlements with Goldman Sachs, Kotak, and Edelweiss are already reflecting in reduced finance costs, with ₹300 crore in annual interest savings guided for FY27,” JM Financial noted. The brokerage said the Q2FY26 results were largely in line with expectations.  ALSO READ | Data Patterns zooms 125% from March low; what's driving defence stock?

Nuvama: Gaining momentum; upgrade prescribed

Nuvama upgraded Biocon to Buy from Hold, with a target price of ₹480 (up from ₹365), highlighting visible recovery after several weak quarters. The brokerage noted healthy momentum in biosimilars—driven by steady base growth, bStelara and bAspart launches, and new products including denosumab and bEylea. Generics launches, including GLP-1, are expected to improve operating leverage, while structured debt reduction will lower finance costs.

 

Nuvama also flagged high net debt ($1.1 billion) and the potential BBL merger as key watch points. Biocon is trading at FY26E/27E EV/Ebitda of ~17x/13x. The brokerage expects generics recovery and new CRDMO contracts to support FY27 growth, with structured debt reduction aiding a decline in finance costs from Q4FY26.

 

“Overall, we model a 15 per cent/19 per cent revenue/Ebitda CAGR over FY25–28E, while RoCE (ex-goodwill) is expected to improve from 4 per cent in FY25 to 9 per cent. We value the biosimilar business at 20x EV/Ebitda (from 17x), CRDMO at 22x (earlier 20x), and generics at 9x on H1FY28E,” the brokerage said.