Biocon Biologics Limited, a subsidiary of Biocon Limited, has received a significant credit rating upgrade from S&P Global Ratings, marking a positive milestone in the company's financial restructuring efforts. The rating agency upgraded the company's long-term issuer credit rating to 'BB+' from 'BB' and revised the outlook to stable on January 28, 2026.

Capital Structure Simplification Drives Upgrade

The upgrade primarily stems from Biocon's successful capital structure simplification through recent equity transactions. The company utilized fresh equity proceeds to settle a US$1 billion compulsorily convertible preference shares (CCPS) arrangement with Viatris Inc. through a combination of equity share swaps and cash consideration.

S&P estimates that Biocon's adjusted debt will decline significantly to approximately INR115 billion at the end of fiscal 2026, down from INR248 billion in fiscal 2025. This substantial reduction reflects the removal of structured debt liabilities and the CCPS obligations that were previously considered debt-like instruments in financial ratio calculations.

Improved Financial Metrics and Outlook

The rating agency projects substantial improvements in Biocon's key financial ratios following the capital restructuring. The funds from operations (FFO) to debt ratio is expected to improve dramatically to about 22% at the end of fiscal 2026 from less than 10% in the previous year, with further improvement to approximately 30% by fiscal 2027.

S&P highlighted that new product launches and favorable industry trends will support Biocon's earnings growth. The pharmaceutical sector is expected to register healthy growth through 2027, particularly for GLP-1s and treatments for oncology and rare diseases.

Business Fundamentals and Growth Drivers

Biocon's revenue growth will be led by its biosimilars business, which S&P estimates will grow by approximately 15% in fiscal 2027. The scale-up and market share gains of new products bStelara and Aflibercept are expected to offset price erosion effects inherent to the generics industry. The company plans to launch at least one new product, Denosumab, during this period.

Key Business Highlights:

• 10 commercialized biosimilars currently in portfolio
• Pipeline of 20+ biosimilar assets across multiple therapeutic areas
• High single-digit to low double-digit market share in U.S. and European markets
• Serving over 6.3 million patients across 120+ countries

The company's generics and contract research development and manufacturing organization (CRDMO) business segments are also expected to expand steadily, with generics growing by about 10% led by new product launches such as Liraglutide in the U.K. and EU markets.

Strategic Positioning and Market Presence

Biocon Biologics operates as a fully integrated global biosimilars company with comprehensive 'lab to market' capabilities. The company maintains eight manufacturing sites globally - six in India, one in Malaysia, and one in the United States. Geographically, the U.S. and EU markets accounted for 46% and 25% respectively of group revenues in fiscal 2025.

The stable outlook reflects S&P's view that Biocon's earnings will grow steadily over the next 12-24 months, supported by growing demand for generics and biosimilars in key international markets and successful new product launches. This growth trajectory should help maintain the company's improved financial position and support further ratio improvements.

SBI Mutual Fund has made a substantial investment in biocon Ltd, increasing its shareholding to 7.0379% through the acquisition of over 3.34 crore shares on January 16, 2026. The transaction represents a significant vote of confidence from one of India's leading mutual fund houses in the biotechnology major.

Shareholding Enhancement Details

The mutual fund's latest acquisition involved purchasing 3,34,70,117 shares, representing 2.2191% of Biocon's paid-up share capital. This strategic move increased SBI Mutual Fund's total holding from 8,06,08,009 shares (5.3445%) to 11,40,78,126 shares (7.0379%).

Transaction Structure and Methodology

The share acquisition was executed through a combination of qualified institutional placement and market purchases. SBI Mutual Fund conducted these transactions under its various schemes, demonstrating a diversified approach to the investment. The acquisition was completed as of the close of business hours on January 16, 2026.

Regulatory Compliance Framework

The substantial acquisition triggered mandatory disclosure requirements under Regulation 29(2) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. SBI Mutual Fund's previous disclosure was made on November 12, 2025, when its holding stood at 5.0013% of the paid-up share capital.

Company Capital Structure Impact

Biocon's equity share capital structure shows significant growth, with the total equity capital increasing from ₹754.12 crores to ₹810.45 crores. The company's share capital consists of equity shares with a face value of ₹5 each, and the total number of equity shares outstanding increased from 1,50,82,43,188 to 1,62,09,07,773.

Market and Exchange Information

Biocon Ltd shares are listed on both BSE Ltd and the National Stock Exchange of India Ltd. The formal disclosure was communicated to both exchanges as part of the regulatory compliance process. SBI Mutual Fund, operating under SBI Funds Management Limited, completed all necessary documentation through its Chief Compliance Officer and Company Secretary, Vinaya Datar.

This strategic investment by SBI Mutual Fund underscores institutional interest in Biocon's biotechnology and pharmaceutical operations, reflecting confidence in the company's market position and growth potential within the healthcare sector.