, MD of India Capital Markets is of the view that Jubilant Organosys is having a growth potential of 30% from current valuation to appreciate in this financial year.
Maheshwari told CNBC-TV18, "While recommending midcap stocks, we have four criteria in-house. First is there should be less debt burden on the company, so that they can sustain this high-interest cost regime and there should be sustained track record of 5-7 years of revenue growth as well as profitability. There should be less public float and more institutional float in any stock and it should be into defensive domain. So after that only we are recommending our midcap ideas. Jubilant Organosys is a very good pharma pick at current valuations. If we see the business model it is an integrated pharma company, which works across all pharma value chain. They are having four business verticals, which are pharma and life sciences, drug discovery and delivery, performance fibers and industrial products. One good thing is, in last five-years their bottomline has shown a more than 60% CAGR and we are expecting same momentum to continue."
He further added, "If we see the triggers in the stock in last financial year, they have acquired one company called Draxis Health in Canada. This year we are expecting a 50% of their topline to come from this company. Besides this company is also exporting 46% of their products to US and other markets, so with current fall in rupee, we are expecting they are going to be additional benefited. Besides this if we see their float also like there is around 18% free-float with public in the stock and there is high 32% institutional float in this company. Looking at all this, the stock is available at only 8-price earning (PE) multiple from FY09 earnings. So it is having a growth potential of 30% from current valuation to appreciate in this financial year."
Disclosure: Analyst has recommended the above stock to his clients.
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