Jupitor Bioscience

Hi, I've been holding this company for few years but in the past six months or so the valuation has deteriorated so much that it is available for (27.80) almost the EPS value (23.22). Book value per share is 189.

Anyone tracking this company? I can't figure out what has gone so wrong with this. Appreciate someone throwing some light into this. Is it really an opportunity? There are some good news about the company bagging some 750 million rupees contract for multiple years recently.

I noticed some goof up with issuing shares to promoters in the last AR.

Attaching a snippet of fundamentals;

Period 31-Mar-10 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06
In Million's of Rupee
Revenue 2,326.92 1,798.63 1,556.72 1,214.17 917.19
yoy growth 29.37% 15.54% 28.21% 32.38% 13.82%
Gross Profit 1,462.85 1,139.63 915.99 677.46 491.67
% margin 62.91% 64.20% 59.32% 55.85% 53.76%
EBITDA 1,195.77 902.73 695.8 515.57 425.69
% margin 51.39% 50.19% 44.70% 42.46% 46.41%
Operating Profit 490.66 377.51 344.6 270.58 233.53
% margin 21.09% 20.99% 22.14% 22.28% 25.46%
Net Income 424.78 330.42 297.37 202.29 183.82
% margin 18.25% 18.37% 19.10% 16.66% 20.04%
EPS (GAAP) 23.22 19.66 19.66 20.49 20.74
yoy growth 18.11% 0.00% -4.05% -1.22% 23.24%
Dividends per Share 2 2 2 2.25 2.5
yoy growth 0.00% 0.00% -11.11% -10.00% 11.11%
Capital Expenditures 1,349.79 1,091.34 1,198.32 642.69 181.29
Free Cash Flow -461 -442.41 -756.92 -487.3 113.87



I feel some sort of fraud etc might be here. Will advice caution.



Thank you Ayush, is there a way to figure out the fraud (next to impossible)? I think it is the biggest risk in investing in small caps. It would be a good learning experience if not anything else if we can figure out what is wrong. I might have missed something very obvious, request any of you to take a look. Thank you.


Hi Binu,

I don’t know how & why Ayush suspects some fraud but to me one thing that is an immediate red flag is Promoters have pledged 45% shares and hold just 4% odd. Other than that everything looks ok apart from the fact that dividend payout has not matched up with growth in NP. I generally stay away from Pharma & companies with Bio in description mainly as i don’t understand them, i advise you to also get some insights into the business rather than just look at numbers.

)- Extremely negative on the Free Cash Flow front.

)- High Inventory days

)- Nothing home to write about RoA, RoCE and RoE

)- Very low promoter holding (19%)

And as Siddharth points out, 45% pledging. Consider the holding…and now consider almost 50% of that is pledged.

Forget about Balance Sheet shenanigans and Operator rigging, why do even want to look at this stock?

There are much better pharma companies (Ajanta pharma, for one) than this.

Thanks, but no thanks on the stock.

Hi Siddharth,

I think your observation about pleading is very valid. Where did you find this information from? I wasn’t able to find this information at all. Also, the pledging appears to have a big impact on investor confidence but there seems to be a gap in the process to have this information easily available.

The company makes peptides and protein in bulk which are the basic building blocks in speciality drug manufacturing and appears to be spending efforts on discovering new synthesis that sounded promising when I made this investment. However, I would have looked for better business models and moat if I was looking at this company now.

Kiran- Thank you for the analysis and agree that the philosophy here is to look for high growth unnoticed companies with promising potential. But if the prices were beaten up such that a genuine company is available at 1/5 th of its book value price, won’t it be interesting? I was trying to find if that was the case.

I think there is large scale equity dilution happened in this case but I can’t seem to find more details. The 2009 AR says promoters held 2.1 million shares which is 8.33%. But there is this disclosure to BSE on 20th Jan which says they hold 2.8 million shares but makes up only 4.62%. I think this means the number of stocks have more than doubled and market adjusted the price and punished for not being transparent about it.

It wouldn’t make the stock attractive if equity dilution happened but I still am interested to know how, when this happened and why I can’t find this information.



Hi Binu,

I came across this notice on Jupiter, while looking for something else and wanted to pass it on. (And MC shows the Book Value per share as Rs.59/- and not Rs. 189/- as you stated earlier. I wonder how this massive difference came about?)

Jupiter Bioscience Ltd has informed BSE that an Extraordinary General Meeting (EGM) of the Company will be held on February 28, 2011, inter alia, to transact the following business:

1). Increase in Authorised Share Capital from Rs. 70 Crore to Rs. 100 Crore.

2). Not exceeding 12,50,000 Equity Shares and 67,00,000 Equity Share Warrants on Preferential basis at price of Rs. 90/- per equity share/warrant to Promoters and

3). Not exceeding 19,68,750 Equity Shares to Mr. Dinesh Kumar Singhi and others on preferential basis at a price of Rs. 80/- per equity shar

Hi Kiran,

Thanks for taking a look, sorry about the delay. I have the EGM notice with me and have done the following calculation to understand what is the actual EPS and book value. My figure was from the annual report which did not take into account of the massive difference in number of equities. I think it is because of the GDRs, I don't really know the details of how this works. But with the new numbers, it is clear that the market has responded in accordance with the equity dilution. I'll possibly sell this off because I bought this by just looking at the Bio science, products, and valuation. Not the business sense of this org.

old new
PAT 424777892 424777892
# shares 18233470 62433470
EPS 23.2966019 6.80368866
eq cap
reserves, surplus 3450640077
add c5,c6
old book value 199.24758
old eps
new eps
new book value 58.189538
old eps
new eps
new PE

Hi Kiran…

is there any such stocks which u would like to accumulate or fresh buying for a 2-3 years with 8-10 bagger and what are the sectors are outperforms in coming days

With Thanks,


Dear friends, After all its its the conviction in the management and corporate good governance that figures out in stock selection.I think some 10 years back or so, the regulators cried foul when the prices of the companys shares were jacked up