Hold Jubilant Pharmova; target of Rs 395: ICICI Direct

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ICICI Direct's research report on Jubilant Pharmova

Jubilant Pharmova is engaged in specialty pharmaceuticals, CDMO, generics, drug discovery and proprietary novel drug businesses. In specialty pharmaceuticals, it is the third largest radiopharmaceutical manufacturer with second largest commercial radio pharmacy network in US. It is the second biggest player in the allergenic extract market in the US • In CDMO (CMO, APIs) Jubilant is engaged in CMO of sterile injectables, ophthalmics, otics and ointments, creams and liquids • Revenue break-up (Q2FY23)- Generics - 10%, specialty pharma – 51%, CDMO sterile injectable – 19 % and CRDMO (CDMO-API + Drug Discovery) – 20%.

Outlook

We upgrade from REDUCE to HOLD but continue to maintain our neutral stance due to 1) negative operating leverage in generics amid regulatory overhang and 2) weak return ratios. We continue to monitor traction from specialty pharmaceuticals & CRDMO. Valued at Rs 395 i.e. 12x FY24E EPS of Rs 32.8.

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Jubilant Pharmova - 31-10-2022 - icici