Biocon surges 7% post-Q4 nos; should you buy now or wait for correction?

Biocon share price: Biocon shares jumped as much as 7.12 per cent to Rs 259.50 on the BSE in the morning trade on Wednesday, May 24, a day after the company released its March quarterly numbers. At the time of writing this report, the scrip was trading nearly 4 per cent higher at Rs 251.50.

Biocon Q4 results

The company logged a consolidated net profit of Rs 313 crore for the quarter ended March 2023 on the back of robust sales as against a net profit of Rs 239 crore for the corresponding period a year ago. The company’s revenue grew 58.7 per cent to Rs 3,929 crore for the three-month period, which was estimated at Rs 3,694 crore. The company’s margin — a key measure of profitability for a business — increased to 26 per cent from 24.6 per cent a year ago which was estimated at 23 per cent.

"Biosimilars continues to be the largest business segment for Biocon, with revenues of Rs 2,102 crore, a growth of 114 per cent, exiting the year on a USD 1 billion revenue trajectory," Biocon Executive Chairperson Kiran Mazumdar-Shaw said.

The company also said it was raising Rs 800 crore from Edelweiss Alternate Asset Advisors Ltd (EAAA) through the issuance of NCDs.

Further, Biocon's board recommended a final dividend of Rs 1.50 per share for the financial year ended March 31, 2023.

What analysts suggest

“Biocon stock has already made a meaningful bottom and here risk-reward is favourable in the long term. If there is a dip in the stock around the Rs 230 to Rs 235 zone, investors can buy keeping the stop loss at Rs 225 apiece. In the short term, the stock has the potential to reach targets of Rs 260 to Rs 275 apiece,” said Himanshu Gupta, Vice President, Research Globe Capital Markets Ltd.

"Though Biocon has given 35 per cent return after hitting the low of 192 approx. On the weekly scale, it looks lucrative since it has reversed from a bullish AB=CD pattern along with the weekly relative strength index above 50 levels which is indicating further bullish momentum. One can buy in the zone of Rs 235 to Rs 250 with a stop-loss of Rs 199 and the upside target would be Rs 320," said Jigar S Patel - Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers.

"Biocon on Tuesday reported a 31 per cent YoY rise in net profit at Rs 313 crore in the fourth quarter of the financial year FY23. The growth, like Q3, was led by biosimilar and its research services businesses. Analysts' target for Biocon is Rs 290. Out of 21 analysts, 14 analysts have a buy rating, 4 have a hold rating and 3 have a sell rating on the stock," said Amber Pabreja, Founder and CEO Trendlyne.

"Biocon has been intensively working in the U.S. as well. The United States is currently looking to cut its costs and cut imports in order to bring down its inflation and restore its debt, and trade balances. This scenario can lead to a stagnation in Biocon's U.S. business, and also the FDA approvals are something to be watched closely, as a disapproval in their product can bring down the stock," said Sachin Jasuja Founding Partner,  Equities, Centricity Wealthtech.

He added some more quarters of the business should be watched closely before taking an investment decision in the company.

Biocon shares: Past performance

Biocon shares have lost nearly 4 per cent of their value in 2023 so far, a period in which the Nifty headline index has risen about one per cent.

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