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Biocon Limited – Outperformer, Merrill Lynch

April 25, 2007

Merill Lynch has put an outperform rating on Biocon Limited. Merrill raised price target on Biocon to Rs600/share (from Rs500/share) as it remains upbeat on

  • Near doubling of insulin revenues by FY09E (current12-13% of revenues)
  • Robust 40%+ growth outlook for contract research andlicensing fees

New Price Target is based on target multiple of 20x on FY09E earnings. EPS Growth is expected to be 26% and 18% FY08E and FY09E respectively. Biocon’s 4Q net profit of Rs600mn (27% growth YoY), about 18% ahead of MLe while revenues were 16% ahead of MLe. Higher than expected 260bp increase in EBITDA margin was driven by statin supplies to US and better product-mix.

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