Target: ₹Rs 395

CMP: ₹290.05

Biocon has established itself as a comprehensive and integrated player in biosimilars supported by the front-end acquisition of Viatris, the partnership with Serum Institute augmenting growth via vaccines, established R&D capabilities and a large upcoming US pipeline.

Biocon's integrated model is yet to see commercialisation success in developed markets whilst the R&D success is well established as highlighted by Semglee interchangeability approval in the US. Biologics revenue ramp-up will be a major driver of overall growth.

Meanwhile, Syngene and generic businesses will continue to grow in better than healthy teens over the medium term.

Given the multiple upcoming triggers, favourable valuation, marquee investor backing and an enviable R&D pipeline, Biocon is well poised to turn the tide in its favour. We initiate coverage on Biocon with a Sep’23 SOTP target price of ₹395 valuing Generics business at 12x EV/EBITDA, Biocon Biologics at 21x EV/EBITDA (63 per cent stake) and Syngene at 23x EV/EBITDA (65 per cent stake) adjusted for holding company discount (20 per cent).

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