Shares of Rakesh Jhunjhunwala fall 54% in one year, Jubilant Pharmove’s fourth quarter profits fall 72%; stock is upgraded

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Shares in Rakesh Jhunjhunwala’s portfolio Jubilant Pharmova fell 54% to Rs 398.15 each on BSE from Rs 890 (52-week high) in a year. The company reported a 72% drop in net profit to Rs 59.55 crore for the period ended March 31, 2022. Revenue for the quarter fell 3.9% to Rs 1,524.57 crore from Rs 1 586.47 crore year on year, however, it was up 16 percent sequentially. Big bull Rakesh Jhunjhunwala held 3.61% or 57.50 lakh shares and his wife Rekha Jhunjhunwala held 3.15% stake or 50.20 lakh shares in this drugmaker as of March 31. During the December quarter, Rakesh Jhunjhunwala and his wife collectively owned 6.3 percent of the company’s equity.

ICICI Securities reduced the target share price to Rs 447 from Rs 550 earlier, but upgraded its rating to “add” from “hold” earlier. He believes that after a correction of almost 44% over the last 6 months, stock market valuations have become reasonable. Although he noted the slower-than-expected recovery in the radiopharmaceutical and generic businesses, and regulatory hurdles as key downside risks. “As radiopharmacy demand recovers, pricing pressures and import scares continue to impact the generics sector,” he added.

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Motilal Oswal Financial Services has set a target price of Rs 430, up 6% from the last close, valuing the stock at 7x EV/Ebitda on a 12-month forward-looking basis. “Current valuation adequately takes into account higher earnings growth,” he added. The research and brokerage firm expects a moderate Ebitda CAGR of 9% in FY22-24 due to a subdued business outlook in the United States due to the import alert at Roorkee; Radiopharma activity gradually recovering; a decline in demand, leading to price erosion in the generic segment in the United States; and slower API uptake due to plant renewal activities.

Nirmal Bang analysts see a 32% rise in the share price with a target price set at Rs 532 each. The brokerage said the main earnings drivers going forward will be the ramp-up of Ruby Fill sales, the recovery of MAA and DTPA sales, new launches from Radiopharma and the impact of initiatives. rationalization of costs in the radiopharmacy sector.

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The brokerage firm recommended buying Jubilant Pharmova shares. He believes the company will target large pharmaceutical and biotech companies for parenteral products with a manufacturing platform capable of producing multiple types of vaccines – live, mRNA and inactivated/subunit vaccines. “We are revising our revenue estimate by increasing revenue in the CMO, Specialty Pharma and CRDS segments and lowering the estimates for other expenses to 23% of sales for fiscal years 23 and 24,” he said.

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