In a conversation with Zee Business Managing Editor Anil Singhvi, Omkara Capital Founder Varinder Bansal decodes why Jubilant Pharmova, a company from the pharma space, is lucrative for investors and expects the company to grow rapidly in the coming year amid a strong business profile.

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The market analyst Bansal said, Jubilant Pharmova is a sizeable company, with experience of over 18 years and is available at good and cheap valuations, as the pharma sector has been doing quite well in the last two-three years.

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The company has a long history with a market capitalisation of around 12500 crores, the promoters Shyam Bharti and Hari Bharti of Jubilant Foodworks, and Jubilant Ingrevia, entered into pharma business in 2003 through acquisitions, said Bansal, adding further.  

It first acquired the Nanjangud API facility in 2003, followed by a Belgium-based pharma company in FY05, a majority stake in Cadista in FY06, then got HollisterStier in FY08 and Canada-based Draxis Pharma in FY09, the market analyst said while speaking to Zee Business.

Bansal expects the company to rise by 10x FY23 earnings EPS, as it’s a cheap stock with respect to its market capitalisation to share price. He added, the company’s EBITDA is at the 10-12th position with respect to an entire industry and market-cap is at the 20-21st spot in the pharma industry.

Bansal added, the company’s formulations, CMO, and API business amount to 51 per cent of sales, while the remaining is from the radio pharma business. CMO and API are the strongest pillars for the company at present, whereas radio pharma is weak currently, due to which the Q4 numbers were weak.

It is the only company with the biggest manufacturing facility in the United States and also the only pharma company to produce Remdesivir oral and injectable doses, added Bansal. Expecting a growth of 15 per cent, the analyst said, the company cut its debt by Rs 500 crores in FY20, Rs 600 crores in FY21.