Broker’s call: Biocon (Buy)

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Target: ₹496

CMP: ₹370.40

Integrated pharmaceutical major with capabilities across the value chain, Biocon is a leading integrated global pharmaceutical company with a comprehensive presence across the entire value chain, encompassing research and development (R&D), manufacturing, and marketing.

The company boasts a geographically diverse revenue base, drawing from markets including the US, EU, India, and various other regions worldwide. In FY2024, Biocon’s revenue streams are well-distributed: generics, comprising active pharmaceutical ingredients (APIs) and formulations, account for 19 per cent; biosimilars contribute 58 per cent; and research services make up 23 per cent.

This strategic diversification across different business segments and geographical markets effectively mitigates revenue risks associated with competition and economic slowdowns, thereby enhancing overall revenue stability

Considering the company’s new product launches, industry tailwind in research service business, improved visibility in generic business and biosimilar, new pipeline and new formulation launches, including launch of Liraglutide in the UK for diabetes and obesity, we estimate a target price of ₹496 for the stock. This valuation is based on a P/E ratio of 26x, applied to an estimated FY26 EPS of ₹19.09.