MOSL: JUBILANT LIFE SCIENCES (Buy)-Specialty Pharma injects some cheer into earnings
Jubilant Life Sciences: Specialty Pharma injects some cheer into earnings
(JUBILANT IN, Mkt Cap USD1.8b, CMP INR794, TP INR1020, 28% Upside, Buy)
- In-line performance: JLS' revenue grew 30% YoY to INR20.8b (est. of INR20.9b). Adjusting for the Triad business (which was added in 2QFY18, and thus, had no contribution in base quarter 1QFY18), revenue growth stands at 10% YoY, led by 15% YoY growth in Life Science Ingredient segment (LSI; 41% of sales). Ex-Triad Pharma segment (40% of sales) revenue rose 5% YoY.
- Improved margin in Specialty Pharma drives profitability: Ex-Triad Specialty Pharma (47% of Pharma business) EBITDA margin expanded strongly by 300bp YoY to 49%. API/Generics segment (31% of Pharma sales) exhibited 630bp EBITDA margin improvement. However, LSI EBITDA margin shrank 200bp YoY. Overall EBITDA margin, thus, came in at 21.1% (est. of 21.3%) in 1QFY19. Assuming Triad has nominal EBITDA margin, JLS' ex-Triad EBITDA margin stands at 25% (+400bp YoY). Improved EBITDA margin led to 36% YoY growth in PAT to INR2b in the quarter.
- Debt reduces marginally: JLS's net debt reduced to INR32b v/s INR32.3b in FY18. Average blended interest rate cost increased marginally at 6.03% p.a. in 1QFY19 v/s 5.9~% in FY18.
Jubilant Life Science is an integrated pharmaceuticals and life sciences company. Co. offers a range of products and services to its customers across the globe. Co. operates two business segments: Pharmaceuticals and Life Sciences Products and Services and Agri and Performance Polymers ("APP"). In Co.'s Pharmaceuticals and Life Sciences Products and Services segment, Co. manufactures and provides Fine Chemicals and Advance Intermediates for the global pharmaceuticals, agrochemicals and life sciences industry. The products in Co.'s APP segment have various applications in industries such as pharmaceuticals, agrochemicals, textiles and foods.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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