MOSL: JUBILANT LIFE SCIENCES (Buy)-Growth levers intact, overall sales driven by LSI segment
​Jubilant Life Sciences: Growth levers intact, overall sales driven by LSI segment
(JUBILANT IN, Mkt Cap USD1.7b, CMP INR704, TP INR905, 29% Upside, Buy)
- JLS delivered sales of INR15.6b in 1QFY18, marginally lower than our estimate of INR15.9b. EBITDA margin came in at 21.7% (est. of 22%), led by elevated margin in the pharmaceuticals business. PAT of INR1.4b missed our estimate of INR1.6b due to a higher tax rate for the quarter.
- Specialty – a key driver of pharmaceuticals business: Pharmaceutical sales increased 8.8% YoY to INR8.2b (51% of overall sales) – the highest-ever quarterly sales for this segment. Specialty segment, which grew 16% YoY, not only drove pharma revenues, but also aided EBITDA margin. JLS expects the specialty segment momentum to continue over the medium term.
- LSI segment led overall sales growth for JLS: LSI revenues increased 13.4% YoY to INR7.4b, led by increased business from the vitamins and advanced intermediates segments. EBITDA margin remained stable for the quarter. JLS guided for a better outlook in this segment, led by improved demand, strong price environment, capacity expansion and launch of new products.
- Debt-reduction program on track: In 1QFY18, net debt reduced by INR1.13b to INR35b, while average blended interest rate declined to 5.9% from 6.8% in FY17. JLS remains on track for its debt-reduction program and reducing interest cost.
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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