Bad news for Jhunjhunwala as the company loses Rs…, stock goes down by…

The recent market correction has taken a toll on the holdings of three discretionary trusts named after the children of late investor Rakesh Jhunjhunwala. Known for his keen eye in picking quality stocks, Jhunjhunwala’s portfolio has suffered a significant blow, with nearly Rs 1,600 crore wiped out in just two sessions due to a steep decline in Concord Biotech’s stock.

Concord Biotech Plunges Nearly 30% in Two Days
Concord Biotech’s shares have taken a massive hit, dropping as much as 30% in just two trading sessions. On Monday, the stock plummeted by another 12.46% to reach Rs 1,482.15, following a sharp 19.75% decline on Friday when it settled at Rs 1,693.20. The stock is now down 45% from its 52-week high of Rs 2,658, which it had reached in September 2024.

The majority of this holding belongs to the Nishtha Jhunjhunwala Discretionary Trust, Aryaman Jhunjhunwala Discretionary Trust, and Aryavir Jhunjhunwala Discretionary Trust, which collectively own nearly one-fourth of the company. Specifically, as per the December 2024 quarter, Nishtha Jhunjhunwala’s trust holds 8.03% (83,99,732 shares), while Aryaman and Aryavir’s trusts each own 8.03% (83,99,754 shares).

Why is the Stock Falling?
The sharp decline in Concord Biotech’s share price is mainly due to weak market sentiment and disappointing Q3 earnings. The pharmaceutical company, which specializes in manufacturing Active Pharmaceutical Ingredients (APIs) through fermentation and semi-synthetic processes, reported a 2% drop in net profit year-on-year (YoY) for Q3FY25.

Net profit stood at Rs 75.9 crore, down from Rs 77.6 crore a year ago.
Revenue rose marginally by 1% YoY to Rs 244.2 crore.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) declined 7.46% YoY to Rs 98 crore.
EBITDA margin shrank by nearly 400 basis points to 40.1%.

The biggest hit came from the company’s API segment, which accounts for 72% of revenue. The slowdown was due to delayed customer orders after stockpiling in the previous quarter. Meanwhile, the formulations segment (28% of revenue) saw a decline because global clients shut down operations for the calendar year-end and delays in tender orders.

According to Choice Broking, management expects these orders to materialize in Q4FY25, and growth in its injectable facility is seen as a long-term revenue driver. The company is also banking on the expansion of its Limbasi facility, which is expected to improve API production and enhance profitability.

Analysts Remain Optimistic
Despite the sharp correction, analysts remain bullish on Concord Biotech’s long-term potential. Choice Broking has maintained a ‘buy’ rating with a target price of Rs 2,207, while Antique Stock Broking has set a target price of Rs 2,187. Kotak Institutional Equities has an ‘add’ rating, with a target of Rs 2,050.

Concord Biotech has a strong international presence, with distribution networks across the USA, Europe, Japan, Latin America, Africa, and Asia, along with a significant footprint in India. The company operates two API manufacturing units and one finished formulation unit, all based near Ahmedabad, Gujarat.

Jhunjhunwala Family’s Holdings Take a Hit
As per the latest shareholding pattern (December 31, 2024), the Jhunjhunwala family collectively owns 2,51,99,240 shares, or 24.09% of the company. This stake has remained unchanged since Concord Biotech’s listing in August 2023. However, due to the stock’s sharp fall, the value of this holding has dropped from Rs 5,321.32 crore on Thursday to Rs 3,730.90 crore on Monday, marking a loss of Rs 1,590.42 crore.

While Concord Biotech has faced recent challenges, analysts believe its strong fundamentals and global market reach could help it recover in the long run. Investors will watch closely to see if Q4 earnings meet expectations and if the delayed orders finally come through.