Jubilant Pharmova Ltd. share price target

Jubilant Life Sciences Ltd Q3FY18 results comment Revenue rose by 25.93% to Rs. 2041.47 Cr in Q3FY18 when compared to the previous quarter

ICICI Securities Ltd | Retail Equity Research Revenues grew 39% YoY to | 2068 crore (I-direct estimate: | 1950 crore). Revenues in the pharmaceutical business grew 40% YoY to | 1101 crore (I-direct estimate: | 1078 crore) while life science ingredients (LSI) revenues grew 40% YoY to | 926 crore (I-direct estimate: | 799 crore). The beat vis--vis I-direct estimates in LSI was mainly on account of a favourable pricing environment EBITDA margins declined 209 bps YoY to 20.2% but came in above Idirect estimate of 18.3% mainly due to higher margins in the LSI...

Maintain BUY with a revised TP of Rs 1,020 (SOTP FY20E EV/EBITDA 11x for pharma + 5.5x for LSI). Jubilant Life Sciences (JUBILANT) top-line grew 42% YoY in 3QFY18, fueled by the continued traction in the LSI segment (up 40% YoY) and the addition of the Triad inorganic component. Adjusted for Triad, the top-line grew ~20%YoY. EBITDA came in at ~Rs 4.2bn, in-line with expectations. The margins contracted optically due to the dilutive Triad acquisition. The gross margin was ~62% (down ~450bps YoY), and the EBITDA margin 20.2% (down ~260bps YoY).

Jubilant Life Sciences (JLS) delivered strong 3QFY18 results, with sales, EBITDA and PAT coming in above estimates. JLS recorded sales of INR20.7b (our estimate: INR19.9b), EBITDA of INR4.2b (our estimate: INR3.8b) and PAT of INR2.1b (our estimate: INR1.7b). Performance was led by improved business from the Life Science Ingredients (LSI) segment, full-quarter impact of Triad acquisition, and a lower tax rate. Strong show in LSI segment: LSI sales grew 39.6% YoY to INR9.3b, led by higher demand for JLS??? products. In addition, better pricing helped JLS to achieve highest-ever quarterly segment EBITDA of INR2b (margin of 22.3%).

Maintain BUY with a TP of Rs 850 (SOTP EV/EBITDA 10.5x for pharma + 4.5x for LSI). Adjusted for one month of inorganic sales (Triad), Jubilant Life Sciences (JUBILANT) top-line grew 11% YoY (vs 18.5% optically). As expected, margins contracted sharply. The gross margin came in at 63% (down ~400bps YoY), and the EBITDA margin at 18.6% (down ~600bps YoY), primarily owing to the integration of the low-margin Triad business. Adjusted for one-off acquisition costs (Rs 190mn) and the Triad integration, the EBITDA margin was still down ~350bps YoY. This was owing to the business mix (higher contribution from LSI segment) and negative operating leverage due to deferment of certain API sales. PAT was ~Rs 1.3bn, down 11% YoY.

ICICI Securities Ltd | Retail Equity Research Revenues grew 19% YoY to | 1642 crore (I-direct estimate: | 1716 crore). Revenues in the pharma segment grew 12% YoY to | 905 crore (I-direct estimate: | 934 crore) while life science ingredients (LSI) revenues grew 21% YoY to | 739 crore (I-direct estimate: | 755...

We now initiate formal coverage with a BUY. Our TP is Rs 850 (SOTP Sep-19E EV/EBITDA, at 10.5x for Pharma & 4.5x for LSI). Jubilant Life Sciences (JLS) is expected to list its Pharmaceuticals subsidiary Jubilant Pharma Limited (JPL) in Singapore in 1HCY18. Post listing, JPL is likely to trade at ~25% higher than the current valuation of the India-listed parent, which includes the LSI segment. We estimate JPLs market cap at Rs 120bn, assuming 10.5x FY20E EV/EBITDA. The listing will also help retire ~Rs 4bn in debt.

As per a Bloomberg consensus, the stock is trading at 11.5x FY19E and 8.5x FY20E, a sharp discount to peers. We believe this discount could decrease with a consistent performance of the Radio pharma and LSI segments. Pick up in Rubifil sales post Triad integration would be the next trigger for the stock to run-up. Incorporated in 1978 as Vam Organics Chemicals, Jubilant Life Science (JLS) has spread its wings into a diverse set of verticals, from the easy-to-manufacture APIs and chemicals, to complex steriles, and radio pharma products. On a broader scale, JLS is involved in two key segments, viz Pharmaceuticals and Life Sciences Ingredients. A large part of the revenues (71%) comes from exports, with 41% from North America region. After facing regulatory setbacks in FY14, JLS margins fell below 20%, and the top-line remained flat till FY17.

Jubilant Life Sciences Ltd Q1FY18 results comment Revenue fell by 1.75% to Rs. 1538.38 Cr in Q1FY18 when compared to the previous quarter

ICICI Securities Ltd | Retail Equity Research Revenues grew 10% YoY to | 1596 crore (I-direct estimate: | 1644 crore). Revenues in pharmaceutical business grew 7% to | 859 crore (I-direct estimate: | 875 crore) while life science ingredients (LSI) revenues grew 20% to | 738 crore (I-direct estimate: | 742 crore) EBITDA margins declined 417 bps YoY to 21.2% (I-direct estimate: 21.7%), impacted mainly by a change in product mix. EBITDA declined 8% YoY to | 338 crore (I-direct estimate of | 356 crore)...