Setback for Jhunjhunwala: Company Shares Dip Amid Rs… Loss

Fast Summary

• rakesh Jhunjhunwala’s family trusts lost Rs 1,600 crore following a 30% drop in Concord Biotech’s stock over two days due to weak Q3 earnings and market sentiment.
• Concord Biotech’s stock fell to Rs 1,482.15 on Monday from its earlier Rs 1,693.20 on Friday, marking a sharp decline of nearly 45% from its 52-week high of Rs 2,658 in September.
• The Jhunjhunwala family collectively owns a important stake (24.09%) in the company through discretionary trusts named after his children.
• Disappointing Q3FY25 results contributed to the stock’s decline:

– Net profit declined by 2% YoY; revenue rose marginally by just 1%, and EBITDA fell by ~7.5%.
– API segment revenue (72% of total) slowed due to delayed customer orders; formulations segment (28%) saw declines linked to global operational shutdowns and tender delays.
– EBITDA margin shrank by nearly four percentage points.

• Analysts remain optimistic about the long-term prospects:

– Choice Broking (‘buy’ rating at Rs 2,207), Antique Stock Broking (target price: Rs 2,187), kotak Institutional Equities (‘add’ rating with target price: Rs 2,050).
– Growth tied to expansion initiatives such as its Limbasi facility for advanced API production.

indian Opinion Analysis

The sharp market response reflects investor concerns over fluctuating quarterly performance despite Concord Biotech’s strong fundamentals.A slight drop in net profit compounded by lower API demand raises questions regarding short-term execution challenges but also highlights vulnerabilities when core segments experience temporary disruptions.

Given that analysts remain bullish on long-term growth opportunities like injectable facilities and expanded manufacturing capacity at Limbasi, it suggests that the current valuation hit could be an overreaction tied largely to sentiment rather than structural issues.For India’s pharmaceutical sector-a global hub for APIs-this incident underscores the importance of balancing order management while scaling operations strategically.

While losses inflicted upon Jhunjhunwala’s portfolio are severe in absolute terms (Rs ~1600 crore), they represent potential lessons for institutional investors regarding sector-specific volatility against broader macroeconomic factors impacting export-driven industries.

Read More