Biocon Ltd. shares are under investor scrutiny today as Mylan Inc., a part of Viatris, proceeds with a significant block deal to offload its complete stake in the Indian pharmaceutical major. The transaction, valued at up to Rs 3,481 crore (approximately $363 million), involves the sale of Mylan's entire 5.64% holding, comprising up to 9.2 crore shares.
Sources indicate the floor price for the block deal has been set at Rs 378.50 per share. This represents a 7.9% discount compared to Biocon's closing price of Rs 410.95 apiece on Monday. Citigroup Global Markets India and Jefferies India are acting as the joint bookrunners for this substantial share sale.
Context of the Stake Sale
Mylan Inc. held precisely 9,19,67,019 shares in Biocon at the end of the June quarter, representing its 5.64% stake. This strategic exit by Mylan comes just ahead of Biocon's impending Q1 earnings announcement, adding another layer of interest for market observers.
Analyst Expectations for Biocon's Q1 Results
Brokerage firms have shared their forecasts for Biocon's first-quarter performance. Kotak Institutional Equities projects a robust 20% year-on-year and 7% quarter-on-quarter growth in core biosimilars sales. This anticipated growth is attributed to market share gains across key products, including the ramp-up of bStelara in the US and the launch of Denosumab.
Conversely, Kotak expects a 4% year-on-year decline for Syngene. In the generics segment, a 22% year-on-year growth (flat quarter-on-quarter) is anticipated for 1QFY27, driven by continued benefits from the Liraglutide launch in the UK and EU markets. Overall, Kotak forecasts a 15% year-on-year topline growth for Biocon, reaching Rs 4,520 crore.
Regarding margins, Kotak builds in a 360 basis points year-on-year decline in gross margins to 68%, down 100 bps quarter-on-quarter. However, they expect Biocon's EBITDA to grow 28% year-on-year to Rs 960 crore for the quarter, with a 220 bps year-on-year expansion in EBITDA margin to 21.2% (down 140 bps quarter-on-quarter).
Axis Securities, in its earnings preview, also projected a 15% year-on-year growth in the Research segment and a 6% growth in the Generics segment, partly due to approvals in the Americas. Axis emphasized that the focus for Biocon would likely be on improving margins rather than solely on sales figures. The brokerage noted that biosimilars are projected to achieve 10% year-on-year growth, bolstered by new launches such as Insulin Aspart, Yesafili, Denosumab biosimilars, and Liraglutide in the UK. Furthermore, a Drug Product (DP) Line 2 in Malaysia is undergoing qualification and is expected to become operational soon, with Drug Substance (DS) capacity doubling anticipated towards the end of FY27.