CLSA maintains sell on Biocon, target price Rs 220

CLSA has maintained sell rating on Biocon in the long term with a target price of Rs 220. Shares of Biocon ended up 0.08% at Rs 294.45 on Friday while BSE Sensex closed 226.79 points up (0.55%) at 41,613.19.

Company Financials

For the quarter ended 31-12-2019, the company has reported consolidated sales of Rs 1748.10 crore, up 11.19 % from last quarter sales of Rs 1572.20 crore and up 13.45 % from last year same quarter sales of Rs 1540.80 crore. The company has reported net profit after tax of Rs 233.50 crore in the latest quarter.

The company’s top management includes Dr.Vijay Kuchroo, Mr.Bobby Kanubhai Parikh, Mr.Daniel M Bradbury, Mr.John Shaw, Mr.Kiran Mazumdar Shaw, Mr.M Damodaran, Mr.Mary Harney, Mr.Russel Walls, Mr.Siddharth Mittal, Prof.Ravi Mazumdar. Company has B S R & Co. LLP as its auditors. As on 31-12-2019, the company has a total of 1,200,000,000 shares outstanding.

Investment Rationale

The company’s third quarter result was operationally in line with estimates but a higher tax rate led to a 10% miss on reported profits, said CLSA. Rising competition and strong innovator defence strategies remain a concern and may lead to only a gradual pickup in market share, said CLSA. This could lead to disappointments and poses a downside risk to consensus earnings estimates, said CLSA.