Analysts upbeat on this Rakesh Jhunjhunwala favourite stock; should you buy?

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Brokerages retained their bullish views on drug firm Jubilant Pharmova after it reported a consolidated net profit of Rs 214 crore for the fourth quarter ended March 31, 2021. It had posted a net profit of Rs 260 crore in the same quarter last year.

Sales of the company stood at Rs 1,552 crore for the fourth quarter while the same was at Rs 1,497 crore in the same period of FY20. For the entire 2020-21 fiscal, the company reported a consolidated net profit of Rs 836 crore. It was Rs 898 crore in FY20.

Other updates

Jubilant Pharmova last week said its subsidiary has inked a pact with US-based Ocugen Inc to manufacture covid-19 vaccine Covaxin for the US and Canadian markets.

Jubilant HollisterStier LLC, a step-down subsidiary of the company, has entered into a manufacturing partnership with Ocugen for the production of Bharat Biotech’s covid-19 vaccine Covaxin.

In February this year, Bharat Biotech and Ocugen had entered into a definitive agreement to co-develop, supply, and commercialise Covaxin for the US market.

Brokerage view

Brokerage Nirmal Bang Securities has an ‘Accumulate’ rating on Jubilant Pharmova with a price target of Rs 835, while Motilal Oswal Financial Services has a ‘Buy’ call on the company with a price target of Rs 960.

“Jubilant Pharmova delivered lower-than-expected 4QFY21 earnings, weighed by muted performances in the speciality pharma and generics segments. However, we remain positive on the company on the back of a strong order book for contract development and manufacturing operations (CDMO), new customer additions in the API segment, better growth prospects for Rubyfill, and a long-term pipeline for radiopharmaceutical products,” Motilal Oswal Financial Services said in a report.

Shares of the company traded almost flat at Rs 744.20 at around 11.10 am (IST) on June 23, while the benchmark BSE Sensex traded 18 points, or 0.03%, down at 52,570.

“Near-term growth prospects are constrained as capacities are limited to drive growth and a leveraged balance sheet limits the company’s ability to spend on CapEx,” said Nirmal Bang Securities.

Jhunjhunwala’s stake

With a holding value of over Rs 745 crore, ace stock picker Rakesh Jhunjhunwala is one of the key shareholders in the company. He had a 6.3% stake in the company as of March 31 against 5.8% in the preceding quarter ended December 31.

In his recent interaction with CNBC-TV18, Jhunjhunwala said the healthcare consumption in India will hit the roof and the country will become one of the biggest pharma centres of the world. There is a long way to go.

“Forty per cent of all medicines consumed in the US are from the Indian pharma sector. The sector also has a massive home market,” said Jhunjhunwala.