Stocks to buy: Biocon, Dr Reddy’s, Sun Pharma, among Phillip Capital’s pharma stock picks for up to 22% upside
Biocon’s sales to grow 58% mainly led by the integration of acquired biosimilars operation of Viatris as well as sequential improvement in Fulphila/Semglee penetration in the US. It sees strong 28% growth in research services led by ramp up in CDMO and steady growth in small molecules. The company’s margins may expand 350 bps to 23.8% led by the integration advantage, improving biosimilars sales and improving margins in research services, the brokerage said.
It has a ‘Buy’ rating on the stock with a target price of ₹310 per share, implying an upside of 21% from Friday’s closing price. (Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) With continued gRevlimid benefit, Q2 earnings of the company are expected to remain strong with 44% YoY growth. Margins are likely to improve 740 bps YoY on a low base and incremental benefits of gRevlimid, leading to 65% jump in EBITDA.
The brokerage gave a Buy call on Zydus LifeSciences with a target of ₹725 per share, expecting an upside of over 22% from Monday’s closing price. Dr Reddy’s Laboratories is estimated to see 5% rise in revenue on account of strong US sales at $355 million and 10% like to like growth in domestic formulations. Margins may correct 440 bps QoQ and 430 bps YoY mainly due to lower gRevlimid sales and product mix, leading to 8% fall in EBITDA.
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