Biocon shares fall 6% after Q2 net profit dives 84%. What should investors do?

Biopharmaceutical company Biocon’s shares fell 6% to Rs 320.80 in Thursday trade on the BSE after the firm reported a second-quarter loss, impacted by a deferred tax charge.

The drugmaker’s net profit plunged 84.2% year-on-year (YoY) in Q2 to Rs 27.1 crore, sharply down from Rs 172 crore reported in the same quarter of the previous fiscal year. Operational performance also deteriorated, with the EBITDA margin squeezing to 19% in Q2, down from 21% in the same period last year.

Despite the weak bottom line and operational performance, the company’s revenue from operations increased by 3.7% to Rs 3,590.4 crore, up from Rs 3,462 crore in Q2 of FY24.

At the operating level, EBITDA dipped 7.6% to Rs 685.5 crore in the second quarter of this fiscal, compared to Rs 741.3 crore in the year-ago period.

Should you buy, sell, or hold Biocon’s stock? Here’s what analysts say:

Axis Securities

Axis Securities has maintained its ‘Buy’ rating on Biocon with a target price of Rs 370. The company boasts a strong product pipeline for the next three years, including five new products—Aspart, Bevacizumab, Denosumab, and Stelara — that are expected to drive growth. Additionally, revenue recovery is anticipated in H2 FY25 from liraglutide and new generics.

JM Financial

JM Financial has maintained its ‘Buy’ rating on Biocon with a target price of Rs 380.The brokerage notes expanding market share in key molecules, although new launches are contingent on site clearance. Products such as bAspart, bBevacizumab, bStelara, and bDenosumab may add value in FY26/27. Biocon has refinanced its debt, which could reduce finance costs by 20-30 basis points. Positive growth drivers include Syngene and Generics, with further potential in the biosimilars business starting in 2H FY25.Additionally, Biocon is exploring options to raise funds through a Syngene stake sale, BBL listing, and non-core asset sales to de-leverage its balance sheet.

Motilal Oswal

Motilal Oswal has maintained its ‘Neutral’ rating on Biocon with a target price of Rs 300. The firm has reduced its earnings estimates for FY25, FY26, and FY27 by 56%, 48%, and 25%, respectively, citing regulatory delays affecting biosimilar products like bAspart and bBevacizumab, reduced operating
leverage, pricing pressure on generics, and high interest costs. The target price of Rs 300 is based on a sum-of-the-parts (SOTP) valuation.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)