Jubilant Life Sciences Ltd: Out-performer in Pharma Sector

Jubilant Life Sciences Ltd is a globally

integrated Pharmaceutical and Life
Sciences
Company
operating
in
manufacture and supply of Application
Programming
Interfaces
(APIs),
Radiopharmaceuticals, Solid Dosage
Formulations, Allergy Therapy Products
and Life Science Ingredients. In addition,
it provides services in Contract
Manufacturing of Sterile Injectables and
Drug Discovery Solutions. It has opened
up prospects in the Drug Discovery Solutions Segment by conducting collaborative and
integrated programs. The strength of the Company lies in its unique Pharmaceuticals and Life
Sciences products and services offered across the value chain.
Jubilant Life Sciences shares surged over 3% on Tuesday, 9th August, and showed strong
profitability as it posted a 22.48% rise in consolidated net profit in its FY17 Q1 results on
grounds of improved performance of speciality pharmaceuticals and reduction in
expenses. Jubilant share price settled 3.61 per cent up at Rs 341.90. The stock opened at Rs
327.75 and reached a high and low of Rs 348.45 and Rs 327.75, respectively, in trade on the
result day.

Key Highlights

The consolidated revenue stands at Rs.1420 crores with international revenues

contributing 74% to the overall mix.

PAT was reported at Rs.162 crores which is a 22% YoY rise.

The total revenue has shown a QoQ decline in addition to a rise in expenditure.
However, the operating profit has shown an increase which is justified by cost
optimisation practices.

EBITDA was Rs. 372 Crore, improving by 13% YoY with EBITDA margins at 26.2%, up
from 22.7% in Q116.

The EPS of the consolidated entity rose to 10.15 in comparison to 3.03 QoQ. However,
this huge upshot can to attributed to the presence of an exceptional item in the
previous quarter which deals with changes in the fair value of investments and profit on
sale of investments.

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Capital expenditure was Rs.41 crores and net debt reduction was Rs.247 crores. The
company further aims to reduce debt in the time to come.

On a standalone basis, the profit after tax recovered from a negative Rs.7.47 crores to
positive Rs.20.98 crores with an almost 50% reduction in taxes.

Segment Wise Review

Pharmaceuticals
This segment reported revenues of Rs.752 crores, depicting a 7% YoY rise. Specialty
Pharmaceuticals (Sterile Products) revenues rose 13% YoY, constituting 54% of total
Pharmaceuticals segment sales.

EBITDA growth was 13% YoY with a 34% margin, compared to 32.2% in Q1 FY16;
aided by improvement in Specialty Pharmaceuticals (Sterile Products).

It contributed 70% to the companys EBITDA.

There was an addition of one new client in the quarter in CMO of sterile injectibles with
an order book of $534 million.

Life Science Ingredients

Revenues in this segment have seen a 14% YoY decline while EBITDA margins have
gone up from 17.2% in Q1 FY 16 to 19% in Q1 FY 17. This is attributed to its its cost
optimization initiatives.

Primary reasons behind the revenues decline are lower input prices due to lower crude
prices consequently resulting in a decline in prices of finished products and emphasis
on some profitable markets.

Drug Discovery Solutions

Revenues grew 102% YoY, contributing 3% to total revenues.

The EBITDA margin saw a drastic increase from -3.5% in Q1 FY16 to 32.2% in Q1
FY17.

There have been strategic investments in the Drug Discovery ventures.

Prospects
Mr. Shyam S Bhartia, Chairman and Mr. Hari S Bhartia, Co-Chairman & MD, Jubilant Life
Sciences put forward their outlook by stating We are glad to state that our company has built
a robust long term sustainable business model with the growth engine of Pharmaceuticals and
Drug Discovery Solutions segments. By creating focused management teams for all the three

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segments of businesses, we are able to clearly define strategic initiatives with the right mix of
capital allocation. We believe that the company will continue to deliver better performance
going forward given the robust product pipeline in place.
The Board expects the company to retain momentum with its endeavors such as the new
product launches in Generics, growth in ROW business, expected launches of its products
such as Ruby-fill and other strategic initiatives for better capacity utilization.
With 11 world-class manufacturing facilities in India, US and Canada and a committed team of
around 6500 multicultural people across the globe, the Company is dedicated to deliver value
to customers spread across above 100 countries. The Company is recognized as a Partner of
Choice by leading pharmaceuticals and life sciences companies at a global level.

Investment Opinion
Jubilant is a good buy at 350 which is the previous day low with the target of 410 as it
has come out with excellent numbers and is still trading at a low PE of 12.6.
Jubilant has shown huge delivery quantity of 11.46 lakhs share (20 day Average delivery
position is for 3.5 lakhs share) on 10th august were share traded in a range of Rs. 352 as low
to Rs. 378 as high of that day. There for Rs. 352 can be considered as a good support area to
buy a stock if market gives correction.

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Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways
are solely the personal views of the research team. Users are advised to use the data for the
purpose of information and rely on their own judgment while making investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022
Disclosure
Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also
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Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst:
DYNAMIC/its Associates/ Research Analyst/ his Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject
company.

Do not have any other material conflict of interest at the time of publication of the
research report

Have not received any compensation from the subject company in the past twelve months

Have not managed or co-managed public offering of securities for the subject company.

Have not received any compensation for brokerage services or any products / services or
any compensation or other benefits from the subject company, nor engaged in market
making activity for the subject company

Have not served as an officer, director or employee of the subject company

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