Rakesh Jhunjhunwala-owned stock up 180% this year; HDFC Securities initiates coverage, sees further upside

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Updated: October 04, 2021 12:20 PM

Rakesh Jhunjhunwala: In the base case, HDFC Securities expects Jubilant Ingrevia to hit a target of Rs 795, however, in the bull-case the target is higher.

Rakesh JhunjhunwalaJubilant Ingrevia was formed after Jubilant Lifescience got the NCLT approval for its demerger plan of having two separate entities for pharma and LSI business.

Rakesh Jhunjhunwala-owned Jubilant Ingrevia’s share price has soared a massive 180% so far in 2021, helping the big bull massive returns from the life-sciences ingredients company. The strong rally seen by the sock could continue further, analysts at HDFC Securities believe. The domestic brokerage and research firm initiated the coverage of the stock with a ‘buy’ rating seeing at least 12% upside from today’s opening price to hit a target of 844 per share.. Rakesh Jhunjhunwala, along with his wife, Rekha Jhunjhunwala owns more than 1 crore equity shares of the company, which was earlier known as Jubilant Lifescience.

Jubilant Ingrevia was formed after Jubilant Lifescience got the NCLT approval for its demerger plan of having two separate entities for pharma and LSI (Life Science Ingredients) businesses. The de-merged entity, Jubilant Ingrevia has three verticals, Speciality Chemicals, Nutrition and Health Solutions, and Life Science Chemicals. During the previous financial year, Life Science Chemicals business revenue grew by 13% while that of Nutrition and Health Solution grew 17% on-year basis. 

Stong upside expected

The company operates in a sector with high entry barriers on account of extensive R&D focus and long gestation period before getting approvals from customers. “We estimate 14.5% CAGR in revenue led by double digit growth across all verticals. We project EBITDA/PAT CAGR of 20.5%/28% over FY21-23E led by strong margin and lower finance cost,” HDFC Securities said in the note. They added that their bullish view on Jubilant Ingrevia is on the back of strong demand environment, healthy market share, strong capex programme in the medium term and new additions of products, and China+1 policy adopted by the companies worldwide. 

In the base case, HDFC Securities expects Jubilant Ingrevia to hit a target of Rs 795, valuing the company at 24.5x FY23E EPS. However, their bull case target price is placed at Rs 844 per share, translating to a potential 12.6% potential upside from current levels. 

Rakesh Jhunjhunwala earns massive profit

Along with his wife Rekha Jhunjhunwala. The big bull owns a 6.29% stake in the company with over 1 crore shares held by the ace investor. During the July-September quarter, considering that Rakesh Jhunjhunwala maintained his holdings in Jubilant Ingrevia, the big bull is estimated to have earned Rs 202 crore of profit as the stock surged 44% higher during the time period. 

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