Even as Jubilant Pharmova reports a sharp drop in quarterly profits due to operational issues at its Montreal plant, Systematix remains bullish with a 53% upside target, citing near-term recovery prospects and growth in contract manufacturing.
Jubilant Pharmova has drawn renewed attention after a weak first quarter, even as Systematix kept a bullish stance on the stock. The brokerage assigned a “buy” rating and a target price of ₹1,327, implying upside of about 53% from the share price cited in the report. That view came despite a sharp drop in profitability, with investors instead being asked to look through a temporary operational setback at the company’s Montreal plant.
According to the company’s reported quarterly numbers, revenue rose 17.3% year on year to ₹2,229.4 crore, but EBITDA fell 14.4% to ₹248 crore and the EBITDA margin narrowed to 11.1% from 15.2% a year earlier. Profit after tax also dropped 45% to ₹56.4 crore. The pressure stemmed largely from the Montreal site, which affected higher-margin radiopharmaceutical products, while lower output in Allergy Immunotherapy and remediation costs added to the drag.
Systematix said the disruption had a substantial hit on earnings, but it expects the picture to improve as manufacturing normalises. The brokerage said production has already resumed after successful media-fill validation, with some recovery in radiopharmaceutical supply expected in the current quarter and a fuller rebound in the third quarter of FY27. It also sees margins improving in the second half of FY27 as the allergy business catches up and Montreal stabilises.
Beyond the near-term recovery, the broker is also betting on contract development and manufacturing growth. It pointed to mechanical completion of Line 4 in Spokane, which is expected to begin contributing revenue through technology transfer in the fourth quarter of FY27. Broader sector trends also support the argument that earnings pressure may be temporary: according to a Business Standard preview of Q1 FY27, Indian drugmakers were generally expected to post revenue growth but only modest EBITDA gains, underscoring how margin pressure has remained a feature of the industry even when sales hold up.
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