Biocon - Downgrade to SELL – risk-reward turns negative - Kotak

We believe the recent rally (39% in the past 3 months) in Biocon stock leaves limited valuation support (stock trades at 19.6X FY2015E EPS). While the launch of biosimilar Herceptin in India is a positive, the significant impact on earnings may not be visible until EU approval (in CY2016-17). Biosimilar insulin filings (rh, glargine) in regulated markets are also not expected until CY2016. The base business performance has been mixed – strong contract research and weak currency offsetting volatile API growth. We downgrade the stock to SELL (from ADD) with TP at Rs. 370 (from Rs. 350 earlier) – value the stock at 15X FY2015E EPS.

Source : Equity Bulls

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