Calling Biocon’s valuations “rich”, Citi noted that the stock’s one-year forward price-to-earnings multiple is two standard deviations above the five-year mean, while its one-year forward Enterprise Value to EBITDA is 0.7 standard deviations above mean despite stake sales in Biocon Biologics and Syngene.
The brokerage has lowered its target multiple for Biocon’s biosimilars business to 14 times EBITDA from 20 times earlier, to reflect the worsening market dynamics and changes in the USFDA guidelines. It has also lowered the target multiple of the generics business to 14 times from 16 times earlier to reflect lower margins.
However, the research services business was kept unchanged at 25 times EBITDA.Although Biocon is one of the best globally in terms of biosimilar R&D and execution, according to Citi, prices continue to soften in the in-market products while the pipeline molecules too appear hyper- competitive that may result in the company’s biosimilar sales falling short of street expectations, according to the brokerage.
The recent USFDA guidelines of removing Ph III may invite additional competition and can start weighing on the valuations of Biocon, Citi added, stating further that their financial year 2027-2028 estimated EBITDA multiple is 7% to 10% below consensus estimates.
“Adverse pricing may result in negative surprise on street expectations — Biosimilar prices in the US continue to worsen and also getting reflected in Biocon Biologics’ flattish core pre-R&D EBITDA margins despite the big launch of Ustekinumab,” Citi wrote in its note.
Shares of Biocon are trading 3.7% lower in early trading on Thursday at ₹395. The stock had ended 3% lower on Wednesday as well. Ahead of Wednesday’s session, the stock had risen 13% in the last one month.
First Published: Nov 19, 2025 3:57 PM IS
