Shares of Biocon Ltd. opened 2% higher on Thursday, November 5, after brokerage firm Kotak Institutional Equities upgraded the stock to ‘Add’ from its earlier rating, with a price target of ₹390.
The target price implies an upside potential of around 13% from Wednesday’s closing level.
The brokerage upgrade comes despite Biocon reporting a weaker-than-expected performance in the September quarter (Q2 FY27), with revenue, EBITDA and net profit missing analyst estimates.
Kotak said Biocon missed estimates in Q2 FY27 due to deferred shipments in its biosimilars business and slower growth in generics.
However, the brokerage said that the company continues to guide for a strong second half of FY27, largely driven by the scale-up of recently launched biosimilar products.
Factoring in market-share gains, new product launches and insulin capacity expansion, Kotak expects Biocon’s biosimilars revenue to grow at a compound annual growth rate (CAGR) of 15% over FY26-FY29.
The brokerage has also factored in improved growth across business segments, debt reduction and operating leverage, projecting EBITDA to grow at a CAGR of 17% over the same period.
Kotak said the recent correction in Biocon’s share price has improved the risk-reward profile, despite subdued execution during the first half of FY27.
Biocon reported revenue of ₹4,389 crore in Q2 FY27, up 2.2% from ₹4,296 crore in the corresponding quarter last year. However, the figure was below the CNBC-TV18 poll estimate of ₹4,551 crore.
Net profit declined 57.4% year-on-year to ₹56.7 crore from ₹133 crore a year ago, significantly missing the analyst poll estimate of ₹154.5 crore.
EBITDA was largely flat, declining 0.5% year-on-year to ₹831 crore from ₹835.4 crore in the year-ago quarter. The figure was also below the poll estimate of ₹907.5 crore.
EBITDA margin contracted to 18.9% in Q2 FY27 from 19.4% in the corresponding quarter last year, compared with the poll estimate of 19.9%.
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Biocon shares upgraded by Kotak Institutional Equities after recent correction improves risk-reward