Buy Jubilant Life Sciences; target of Rs 359: Emkay

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Buy Jubilant Life Sciences; target of Rs 359: Emkay

Emkay Global Financial Services is bullish on Jubilant Life Sciences and has recommended buy rating on the stock with a target price of Rs 359 in its September 16, 2011 research report.

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RELATED NEWS Buy Atul Auto; target of Rs 136: Sunidhi Securities Buy Sintex Industries; target of Rs 157: IIFL Short Canara Bank Sep future; target of Rs 417: IIFL ALSO READ See previous views by Emkay Global Financial Services See what other Experts & Brokerages are saying about Jubilant Life See messages about Jubilant Life Jubilant Life BSE | NSE 30/05/12 Are Mutual Funds betting on Jubilant Life?

Emkay Global Financial Services is bullish on Jubilant Life Sciences and has recommended buy rating on the stock with a target price of Rs 359 in its September 16, 2011 research report.

"Jubilant Life Sciences, signed two long term contracts worth US$150mn in CRAMS for 3-4 years. These contracts which are in CMO and Pyridine business, expected to commence in H2FY12 and Q1FY13 respectively. Business is getting back on growth trajectory and new capacity additions in H2FY12 will provide further impetus."

"Jubilant Life has signed a long term supply agreement in Proprietary Products business for Symtet with a leading international Life Sciences company. The total contract is valued at over US$ 80 mn to be supplied in 3 years starting from Q1FY13. This contract has a minimum volume 'take or pay' commitment and has an opportunity to go over US$ 100 mn. Jubilant's North American subsidiary, Jubilant HollisterStier, a leading contract manufacturer entered into a multi year contract with a leading US pharma company to manufacture a prominent over the counter (OTC) women health and personal care product at its Montreal facility. This is a take or pay contract with a minimum quantity commitment and has a total value of over US $ 70 million for a period of over 4 years with a possibility of extension for another 2 years for a higher quantity. The production of the product has already started in Sept' 2011."

"With the signing of new contracts and commissioning of new capacities, business is turning around. FY12 is the year of transition where company is improving the efficiencies, cutting the cost, putting new capacities and signing new contracts. Full impact will be visible in FY13. We expect Jubilant to report 12% revenue growth in FY12 and 20% growth in FY13. We expect EBIDTA margins to improve from 16.1% in FY11 to 19.1% in FY12 and 19.3% in FY13. Earnings will grow by 21% CAGR over FY11-13E. We value the company at 10x FY13 EV/EBITDA with a target price of Rs 359 and upgrade the stock one-notch to BUY. At current price of Rs 216, the stock trades at 12xFY12E EPS of Rs17.7 and 8.6XFY13E EPS of Rs 25," says Emkay Global Financial Services research report.

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To read the full report click on the attachment