Syngene dragged too far as value proposition; avoid Biocon: Prakash Diwan

In a chat with ET Now, Prakash Diwan, Director, Altamount Capital, shares his view on Biocon.

ET Now: Biocon has been surging after the management revealed its intention to file for an IPO for unit Syngene within two months. Do you like Biocon at present valuations?

Prakash Diwan: When you value Biocon from Syngene's perspective, it looks as if you are talking about another SPARC ( Sun Pharma's arm). You have no idea that Syngene is a black box.

The drug maker has a healthy pipeline of biosimilars, but the monetisation ​of some of the molecules could take anywhere between six months and six years.

Apart from that, Syngene has been dragged too far as a value proposition.

Hence, I would not like to buy Biocon at current level for sure. Once the IPO is through, I would rather let it have a price discovery of sorts. Only then, I would evaluate the stock. I am saying this because these are stocks you could get stuck with quite badly.

ET Now: Syngene was valued at about Rs 3,800 crore, a year ago. On an average, pharma stocks have climbed over 50 per cent in the last one year. By this, we can say that Syngene valuation for could be anywhere between 7000 to 8000 crore, the current market capitalisation of Biocon is 9000 so we are staring at a massive value unlocking.





Prakash Diwan: The hypothesis that just because pharma stocks have gone up by 50 per cent, Syngene should be valued at Rs 7,000 crore is where I differ.

I believe that the valuations should be around Rs 4,800 croreTherefore, till the DRHP is out and you know exactly what the promoters what, it is difficult to say anything. So I would not buy Biocon just because of Syngene IPO.