Buy Biocon, target Rs 880: Phillip Capital (India)

Phillip Capital (India) has maintained buy recommendation on Biocon, keeping a target price of Rs 880.

The current market price of Biocon is Rs 592.9 and time horizon given by the brokerage is one year.

View of the brokerage: Biocon's robust earnings growth in FY19 (+144 per cent) was led by biologic launch in the US.


It will deliver a healthy 46 per cent earnings CAGR over FY19-21 led by: (1) ramp-up in Fulphila in the US, (2) visible launch of biosimilars in the US (trastuzumab, glargine) and EU (glargine, pegfilgrastim, trastuzumab), (3) steady biosimilar penetration in the semi-regulated markets, and (4) turnaround in its Malaysia biologics plant.

Such an earnings trajectory will help it to maintain its premium multiple.

We value it at Rs 880 (35x FY20; only comparable peer Celltrion trades at 54x CY20 EPS).

Its initiative for widening its innovative biologic portfolio through partnerships could surprise investors positively in the long term.