Biocon: Pain is over ?

Technically, BIOCON (CMP: 489) has to sustain over 495 for immediate target of 515 and above that 555 zone should be the target in short term. Consecutive closing above 555, it could target 585-600 zone in the mid term and sustain above that 690-700 may be the target in long term (FY:17-18).

On the flip side, immediate support zone is around 459 & sustain below that it could fall to 443-417 area, which may be an ideal zone to accumulate it. Consecutive closing below 417, it may again fall to 400 zone (low probability as of now).

BIOCON gives us a lot of pain, being a huge under performer in the market (topping around 554 in mid July'14 to around 400 in Jan'15). Uncertainty over listing its research arm (Syngene), long gestation period of biopharma molecule & muted growth in the segment may be some of the reasons for its lack luster performance.

But it appears that New Year 2015 brought lots of good news for BIOCON and it took support from its long term vital TL of around 400 zone and after some consolidation around 417-443 zone, it made a recent high of around 492.

There are multiple triggers for BIOCON, such as listing (partial de-leverage) of Syngene, expected start of commercial production from its Malaysian facility (Asia's largest integrated insulin production complex) by next few months, recent approval in Mexico for its latest long acting insulin molecule (Glargine).

BIOCON is also diversifying into agro chemical segment (Syngene-Mangalore SEZ), which may be also a big positive for the company.

Going ahead, BIOCON's products (oral insulin etc) may have huge potential for India also, being a "Diabetes Capital" of the world amid change of life style in "Shinning India".

As par BG model of quick TF metrics, median valuation of BIOCON is around 560 by considering current TTM EPS+DIV @ 25.45 and if we assume projected FWD EPS+DIV of around 33 (FY-17), its median value should be around 640 under the current market scenario.

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
BIOCON	25.45	151.34	27.09	553.63	567.47	560.55	444.57	467.07

BIOCON

33

175

27.09

630.42

646.18

638.30

444.57

467.07