Q3FY20 result highlights
Impact on financials: We have reduced by FY20 / FY21 earnings by 3% each and have incorporated our FY22 earnings estimates.
Valuations & view
With commencement of bPegfilgrastim and bTrastuzumab revenues in the US and guidance for bGlargine US launch in H2FY21, Biocon’s biosimilar portfolio commercialization has truly begun. Going forward, Biocon-Mylan’s ability to compete with formidable competitors will determine the scale of their success. We believe that Biocon is best positioned amongst Indian players to leverage on the global biosimilar theme and will have the best earnings growth amongst peers over the next 2-3 years. While we are positive on the potential of Biocon’s biologics business, we see limited upside in Biocon valuations from current levels. Faster than estimated biologics revenue scale-up (tracking company aggressive guidance of $1bn biologics revenues by FY22) and visibility on incremental biologic launches will be upgrade triggers for BBIL valuations as well as Biocon. Maintain Underperformer rating with a SOTP target price of Rs279.
Biocon is an Indian biopharmaceutical company. Through its subsidiaries, Co. manufactures biotechnology products and is engaged in research and development in biotechnology. Co. provides a range of products from fermentation derived small molecules to recombinant proteins and antibodies. It has developed and taken a range of novel biologics, biosimilars, differentiated small molecules and recombinant human insulin and analogs from 'Lab to Market'. In research services, Co., through Syngene International Limited, is engaged in the business of custom research in drug discovery while the other subsidiary Clinigene International Limited (Clinigene) is engaged in clinical development.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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