This Rakesh Jhunjhunwala-backed pharma stock slips over 3.5% on weak Q1 earnings – brokerage recommends this

Rakesh Jhunjhunwala-backed pharma company – Jubilant Pharmova share price declined over 4 per cent to touch day’s low level of Rs 345.50 per share on the BSE intraday during Wednesday’s session as the company reported disappointing numbers during June quarter of FY23. 

The company’s profit declined almost 71 per cent to Rs 47 crore in the first quarter of the financial year 2022-23 (Q1FY23) as compared to Rs 160.6 crore in a year-ago quarter. Its revenue fell by over 11 per cent to Rs 1,451.7 crore in Q1FY23 as against Rs 1,634.7 crore in Q1FY22. 

Even the margin during the April-June quarter of the FY23 slipped to 13.2 per cent from 23 per cent year-on-year. 

Billionaire investor Rakesh Jhunjhunwala, who is also called as Big Bull of the Indian stock market, holds 1,07,70,000 equity shares, which translates into about 6.8 per cent stakes in Jubilant Pharmova, according to the June shareholding pattern of the company available on the BSE. 

Rakesh Jhunjhunwala along with his wife Rekha and associates publicly holds 32 stocks with a net worth of over Rs 31,212.7 crore as of August 3, 2022, as per stock analysis website trnedlyne.com. 

Operational as well as regulatory issues are impacting Jubilant Pharmova’s performance, Motilal Oswal said, adding that the brokerage awaits clarity in terms of classification of the inspection on its import alert site by the USFDA.  

While earnings are expected to decline by 27 per cent YoY in FY23, the brokerage sees it returning to FY22 levels in FY24, considering a revival in the CDMO business and better profitability in the Radiopharma segment.  

Motilal Oswal continues to value the stock at 6x EV/EBITDA to arrive at a target of Rs 340 per share, while maintaining a Neutral rating on the stock as current valuations adequately factor in an earnings revival in FY24. 

The stock finished over 3.50% southward at Rs 348 on the NSE.