Jubilant Pharmova Ltd. share price target

Improvement in growth for LSI business remains opaque JUBILANT Q4FY20 earnings were higher than our estimate due to higher stockup in US generics, lower erosion in core portfolio and favourable forex. We assumed COVID impact to be realised in Q4FY20, but better availability of inventory and raw materials led to upbeat in EBITDA and EBITDA margin. We believe although Q4FY20 performance was better, COVID impact may drag...

Pharmaceuticals business segment growth likely to be healthy Recent long term contracts in the radiopharma business as well as Rubyfill traction in the US coupled with Europe launch later this year are expected to strengthen the speciality sub-segment growth, which is likely to grow at 14.7% CAGR in FY20-22E to | 3969 crore on the back of strong growth in the radiopharma business and consolidation of pharmacy business. The CDMO business was impacted in Q4FY20 due to Covid related challenges delaying API dispatches. However, going ahead, we expect this segment to...

30 May 2020 JLS has gradually improved margins for three years now, led by superior execution in the Specialty business in both the Pharma as well as Life Science Ingredient (LSI) segments. The overall Specialty business forms 51% of the total revenue. Particularly, the Specialty business in the Pharma segment recorded a 22% CAGR over FY1820, led by better traction as well as inorganic growth. We reduce our EPS estimate by 2% for FY21 to factor COVID-19-led slowdown, particularly in the Life Science Chemical and API segments. We continue valuing JLS on an SOTP basis to arrive at a price target of INR515 and maintain Buy on the stock. Revenues were flat YoY at INR23.9b (in-line). The Pharma segment (INR14.8b; 63% of sales) grew at 6% YoY. The LSI segment saw decline of 11% YoY at IN8b (34% of sales), which hampered overall growth. The gross margin improved 570bp YoY to 64.9% on a superior product mix.

13 May 2020 Under a non-exclusive agreement, Gilead has granted rights to JLS to register, manufacture, and sell the investigational drug Remedisvir in 127 countries (nearly all low-income/lower middle-income as well as several upper-middle/high-income nations), including India. This implies that currently 10 vials (1 of 200mg and 9 of 100mg) are required per patient (under critical condition). However, the top-10 countries (that form 84% of severely critical patients) are not a part of the 127 countries list for which JLS has supply permission, implying limited opportunity over the near term. We are awaiting the outcome of a study related to the use of Remedisvir for mild COVID- 19 positive patients, which can be a significant opportunity in the offing. In addition to JLS, Gilead has similar non-exclusive agreements with Cipla, Hetero, Ferozsons and Mylan to manufacture and sell Remedisvir in 127 countries.

Jubilant Life is an integrated global pharmaceutical and life sciences company engaged in pharmaceuticals, life science ingredients, drug discovery solutions and India branded pharmaceuticals. Company reported good set of numbers during Q3 FY19-20. Demand conditions across all Pharma businesses, Specialty Intermediates and Nutritional Products are strong. In the Pharma business segment, steady performance is witnessed in CMO business. Due to strong order book & new deals, the outlook remains robust. Also, Initiatives have been taken to increase total capacity by over 30% with annual potential revenues of around USD 30 million. New Lyo equipment installed at...

JUBILANT Adj. Sales declined 3% YoY to Rs 23.2bn (PLe Rs24.6bn) on account of 11% YoY decline in LSI (Life Science Ingredients) segment. Adj. EBITDA grew 3% YoY to Rs5.1bn (PLe Rs5.1b), while EBITDA margin expanded by 116bps to 21.9% (PLe 20.8%). With installation of instruments, Ruby-fill received better traction from hospitals though the expectation seems to be short-lived with new prolong legality of Bracco over IP assets. US formulations and API sales to remain muted in FY21E, given the FDA's six...

With lower than usual growth in Pharma and declining LSI, JUBILANT sales Change in Estimates | Target | Reco were 3% lower than our estimates while adj. EBITDA and adj. PAT were ahead by 5% and 6% respectively. This is due to better adj. gross margin by 40bps...

The recent fall in the stock price from Rs 870 (Mar-19) to Rs 445 is largely led by unfavorable IFC loan settlement, USFDA issues and the concerns of ramp up in the specialty segment. Although IRR for IFC loan looks daunting at 20%+, it was 7-8% of total debt and raised at the time of distress in FY15. Meanwhile, the impact of FDA issues will be partly offset by the new block in Roorkee. With added capacities in CDMO and traction gained in radiopharma products, specialty business is driving both growth and profitability. At 6.6/5.6x FY21/22E EPS, along with 13-14% EPS CAGR, we remain positive on the stock's recovery. We maintain BUY on JUBILANT following an 8/12% beat on our EBITDA/PAT estimates for 1QFY20. Our TP is revised at Rs 845 (12x Jun-21E EPS) with a 5/10% cut to our FY20/21E EPS due to higher interest cost and tax rate.

Pharmaceuticals business segment growth likely to be healthy Recent long term contracts in the radiopharma business as well as approval for Rubyfill in the US are expected to strengthen the speciality sub-segment growth, which is likely to grow at 12.3% CAGR in FY19-21E to | 3572 crore on the back of strong growth in the radiopharma business and consolidation of pharmacy business. CDMO business is witnessing strong traction on the back of robust order book and incremental realisation in API segment. The generic business is also registering decent growth on the back of base...

CDMO/ Specialty intermediates (SI)/Nutritional products (NP) lead revenue growth: 1QFY20 sales were up 5% YoY at INR21.8b (our est. INR22.7b), led by 11% YoY growth in the Pharmaceutical segment. Life Science Ingredients (LSI) sales were down 5% YoY to INR8b, impacting overall growth for the quarter. Particularly, CDMO in Pharma and SI/NP in LSI grew 24%/19%/54% YoY. Generics sales grew at moderate rate of 5% YoY and Chemicals sales declined 26% YoY for the quarter. Benefit of superior product mix offset by increased operating cost: Gross...