Buy Jubilant Life Sciences; target of Rs 965: Motilal Oswal
Motilal Oswal’s research report on Jubilant Life Sciences
We recently met Jubilant Life Sciences’ (JLS) management to understand the business performance and outlook in detail. JLS reported revenue of INR44b, EBITDA margin of 20.4% and PAT of INR4.1b in 1HFY19. Management reiterated that it is well placed to improve on this performance in 2HFY19. We expect Pharmaceutical business (55% of sales) to remain on a strong footing, particularly in Specialty Pharmaceuticals. The operating environment for Generic Pharmaceuticals is also favorable, according to management. Life Science Ingredient segment (LSI – 45% of total sales) also stands to benefit from improved prospects for Vitamin business and reduced supply from Chinese competitors. We expect sales/PAT CAGR of 13%/23% to INR97b/INR11b over FY18-20.
We reiterate our Buy rating with a revised TP of INR965 (SOTP-based 12M forward rolling).
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