Synergy gains from stake purchase positive for pharma major Biocon

Brokerages say Biocon's move to fully acquire Biocon Biologics simplifies structure and unlocks value, but near-term stock pressure likely due to dilution and fundraising

The move by pharmaceutical major Biocon to acquire the minority stake in Biocon Biologics (BBL) and turn it into a wholly owned subsidiary is largely positive for the consolidated entity. While brokerages highlight near-term volatility given equity dilution and the qualified institutional placement (QIP) and have cut their near-term earnings estimates, they expect the company to gain from operational synergies over the medium term. The stock is down 7 per cent over the last four trading sessions, and could remain under pressure till the stake buy is completed over the next three months.

 

Biocon already holds over three-fourths of BBL,