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JMFL
Jubilant Life (Buy)
CMP: ₹899.75
Target: ₹930
In 3QFY18, Jubilant Lifescience’s Revenue/EBITDA/PAT of ₹2,067.8/416.8/212.5 crore were 5 per cent/11 per cent/24 per cent above our estimates mainly driven by the strong performance in the LSI business. LSI segment revenues grew 46 per cent y-o-y to ₹920 crore, driven by higher volume demand and a favourable pricing environment, resulting in LSI EBITDA margin improving 676 bps y-o-y (+459bps q-o-q) to 22.3 per cent. Pharma revenues grew 12 per cent y-o-y to ₹1,100 crore driven by strong 81 per cent y-o-y (+49 per cent q-o-q) growth in specialty pharma revenues (₹790 crore) mainly aided by Triad Isotopes acquisition (₹325 crore contribution) which offset the weakness in generics revenues (down 10 per cent y-o-y) on account of the pricing pressure in the US.
Net debt reduction of ₹160 crore despite incurring capex of ₹70 crore was another positive for the quarter. Ruby-Fill is expected to gain traction in the coming quarters and remains a key monitorable.
We increase our FY18-20 estimates to account for the strong growth outlook and higher margin profile in the LSI business. We roll forward our estimates and arrive at a March 2019 target price of ₹930. We maintain our ‘buy’ rating on the stock.
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