Biocon: Should you buy the stock after Q2 results? Here's what brokerages say
₹3,462 crore, indicating a 49% increase compared to the Q2FY23 revenue of ₹2,320 crore. However, on a quarter-on-quarter (QoQ) basis, it remained flat. The biosimilars segment contributed to this growth, with a 97% YoY increase to ₹1,969 crore in Q2 FY24.
Nevertheless, it fell short of analysts' estimates. The generics business reported 4% YoY growth, reaching ₹676 crore. The net profit of the company showed significant improvement, rising by 111% YoY to ₹173 crore.
The brokerage maintained its 'Neutral' rating on the stock with a target price of ₹220 apiece, valuing the stock on a SOTP basis (15x EV/EBITDA for 70% stake in Biocon Biologics (BBL), 54% stake in Syngene, and 10x EV/EBITDA for generics business). Also Read: Stocks to buy this week: NMDC, DMart, SAIL, IDFC among 9 technical picks; do you own any? "Biocon continues to enhance its outlook across key segments. However, the implementation of remediation measures at biosimilar sites, the slow ramp-up in capacity utilization for Syngene plants, and the gestation period associated with investments in the generics segment are currently limiting the outlook for the next 12–24 months.
Also, given the limited upside from its current levels, the brokerage reiterated its 'neutral' stance on the stock," said the brokerage. The brokerage maintained its cautious view on BIOS execution in its core biosimilars business. Elevated net debt (excluding structured investments) at US $1.2 billion remains a concern, it noted.
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