Rakesh Jhunjhunwala pharma stock gets upgrade; brokerage says correction in last 6 months makes scrip attractive, upside seen at 32%

Rakesh Jhunjhunwala portfolio: Rakesh Jhunjhunwala pharmaceutical stock can surge up to 32% from current levels. The pharma stock has given a negative return of more than 50% in one year and dropped over 13% in the past one month, however, brokerage firm Nirmal Bang is bullish on the stock.  

On the back of recovery in sales in the Q4, the brokerage house recommended a “Buy” on Jubilant Pharmova with a target price (TP) of Rs 532.  

Though it feels gross margin disappointed and near-term drivers seem weak, there are medium to long term business drivers, which include reorganization of API and drug discovery businesses into a single entity and capacity expansion.  

It also feels that generics business can recover once the import order on the Roorke facility is lifted. "Radiopharma can surprise on the upside in the medium term, led by their efforts in building an innovative pipeline," it said. 

Jubilant Pharmova Limited reported total income of Rs. 1524.57 crores during the period ended March 31, 2022 as against Rs. 1316.44 crore during the period ended December 31, 2021. The company posted a net profit of Rs. 59.55 crores for the period ended March 31, 2022 as against net profit / (loss) of Rs. 50.99 crores for the period ended December 31, 2021. 

The Board of Directors of Jubilant Pharmova Ltd has, at its meeting held on May 27, 2022, also recommended a dividend of Rs. 5 (Rupees Five only) per equity share of Re. 1 each for the year ended March 31, 2022. 

Meanwhile, another brokerage firm, ICICI Securities, upgraded the stock to 'Add' from 'hold'. It feels recent correction in the past six months make the stock a good bargain. "Recent correction in the price makes valuations reasonable. Hence, we upgrade the stock to ADD from Hold with a revised TP of Rs447/share (earlier: Rs 550/share)," it said.  

Fondly called Big Bull of the Indian market, Rakesh Jhunjhunwala holds 10,770,000 equity shares, aggregating to 6.8% stake in the company. It is also one of the stocks in which the billionaire investor marginally raised his position from 6.3% in December 2021 quarter to 6.8% in March 2022.  

As per the latest corporate shareholdings, Rakesh Jhunjhunwala and Associates publicly holds 34 stocks in the quarter ended March 2022. The net worth of these stocks has been estimated to be over Rs 29,660.1 crore as on May 30, by stock analysis platform trendlyne.com.