Biocon (BIOCON)

FairStock Score: 38/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Strong revenue growth: 5-year CAGR 16.40% and latest sales growth 13.99%, with quarterly sales at ₹4,173 Cr.
• Positive free cash flow of ₹3,858 Cr despite the accounting loss, providing some liquidity cushion.
• Piotroski F-Score of 8/9 suggests relatively healthy operational signals despite weak profitability.
• Promoter holding of 44.91% keeps ownership interest aligned with minority shareholders.

Concerns

• Latest quarter net loss of ₹-52 Cr and profit growth of -24.88% show that earnings have deteriorated.
• Low returns on capital: ROE 2.79% and ROCE 6.25% indicate poor capital efficiency.
• Valuation is stretched: P/E 76.95, EV/EBITDA 276.69, P/B 2.68, and Graham Number ₹122.93 against price ₹357.80 gives a negative margin of safety.
• Altman Z-Score of 1.49 signals balance sheet vulnerability; dividend yield of 0.13% provides negligible downside support.

AI Analysis

At ₹357.80, Biocon is not the kind of business I would call a wonderful company at a fair price. Revenue growth has been respectable: a five-year CAGR of 16.40%, and latest quarter sales of ₹4,173 Cr are still growing at 13.99%. But growth that is not accompanied by profit is an expense, not an investment. Net profit in the latest quarter was ₹-52 Cr, profit growth is -24.88%, and the market still capitalises the firm at ₹63,183 Cr at a P/E of 76.95. A moat normally shows up in durable returns on capital; here ROE is 2.79% and ROCE is 6.25%, both far below what I expect. The Piotroski F-Score of 8/9 and free cash flow of ₹3,858 Cr are encouraging, but Altman Z-Score of 1.49 puts the balance sheet in a worrying zone. Debt/equity of 0.62 is tolerable only if earnings stabilise. Valuation is the bigger problem. The FairStock Score of 38/100, labelled MIXED, matches my read. Book value is ₹133.53, but the P/B is 2.68; EV/EBITDA at 276.69 would need heroic future earnings to justify. Graham's number is ₹122.93 versus a price of ₹357.80, leaving a margin of safety of -217.09%. I would not hide behind the DCF number of ₹1,274.31, because with negative current earnings, the quality of inputs is too fragile. The 0.13% dividend yield gives me no income while I wait. Promoter holding at 44.91% is a positive. All this makes Biocon a turnaround candidate, not a compounder. I need proof of sustained profitability, improving ROE, and a price that offers margin of safety before I would commit capital.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer