Buy this Jhunjhunwala stock for 47% upside, says Ventura; check target price

A stock in which the Jhunjhunwala family holds a significant stake, Jubilant Pharmova Ltd has caught the attention of brokerage firm Ventura Securities, which projected a substantial upside of nearly 47% over the next 24 months.

As of last check on Friday, shares of Jubilant Pharmova were down 0.59% at Rs 1,059.25 on the BSE. According to the September quarter shareholding pattern, Rekha Jhunjhunwala owns 6.43%, or 1.02 crore shares in the company.

Ventura Securities believes the company is at an inflexion point, pivoting from a traditional generics player to a multi-dimensional, globally present pharmaceutical company. 

Ventura noted that the industry environment is structurally favourable for the company, largely thanks to global geopolitical shifts. As innovator companies race to secure supply chains and move manufacturing closer to home (North America), Jubilant’s significant US footprint places it in the sweet spot of this friend-shoring trend, it said.

Ventura highlighted that Jubilant already boasts the second-largest US radio pharmacy network. The brokerage expects this segment to be a cash cow, projecting the US radiopharmaceutical market to balloon from $5 billion to $20 billion by 2030.

The global sterile injectables market is facing a projected supply shortfall of 700 million vials by 2027. Jubilant is expanding its capacity at Spokane and Montreal to plug this gap, the brokerage said.

Crucially, the brokerage flags the ‘BioSecure Act’ as a catalyst that is pushing global players to outsource to India, bypassing Chinese competitors. This geopolitical tailwind is expected to drive a 23% CAGR in the company's sterile injectables CDMO revenue between FY25 and FY28.

Ventura project revenue and EBITDA to compound at approximately 11% and 15%, respectively over FY25-FY28. Despite a heavy capital expenditure plan of up to Rs 4,500 crore to build future capacity, the balance sheet is expected to get lighter, with the Net Debt-to-EBITDA ratio predicted to slash from 1.1x in FY25 to just 0.6x by FY30.

Ventura Securities has maintained a "Buy" rating on Jubilant Pharmova stock with a target price of Rs 1,557, valuing the company at 27.9 times its FY28 estimated earnings.