MOSL: JUBILANT LIFE SCIENCES (Buy)-Strong show in pharma drives earnings
Jubilant Life Sciences: Strong show in pharma drives earnings
(JUBILANT IN, Mkt Cap USD1.6b, CMP INR715, TP INR1050, 47% Upside, Buy)
- Operationally in line: Jubilant Life Sciences’ (JLS) revenue grew 15% YoY to INR23.7b as against our estimate of INR22.1b. The growth was led by 29% YoY growth in the pharmaceutical segment (62% of sales including Triad), which was offset to some extent by 3% YoY decline in the Life Science Ingredients (LSI) business (38% of sales). Gross margin improved 130bp YoY to 63.2% due to favorable product mix. EBITDA margin improved at a lower rate of 60bp YoY to 20.8%, as against our estimate of 22%, due to higher Employee cost. Absolute EBITDA was up 18% YoY at INR4.9b v/s our estimate of INR4.8b. PAT grew at a higher rate of 26% YoY to INR2.7b v/s our estimate of INR2.4b, supported by higher other income of INR290m v/s INR32m YoY. For 9MFY19, sales/EBITDA/PAT was up 27%/30%/39% YoY to INR67b/INR13.8b/INR6.7b.
- Superior margins in pharma drives profitabilty: Overall EBITDA margin at 20.8% was led by increased EBITDA margin in the Pharma segment. Adjusting for Triad sales in Pharma segment sales, EBITDA margin came in at 35.5% for this segment, up 440bp YoY. For LSI segment, EBITDA margin contracted 830bp YoY to 14% on a high base of the past year. However, it improved 170bp QoQ.
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.
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