Buy Jubilant Life; target of Rs 340: Emkay

“Jubilant Life Sciences, Q1FY13 results, above expectations- Revenues at Rs12.4bn (up 31%YoY), b) EBITDA at Rs2.7bn (up 47% YoY) and c) APAT at Rs1093mn (up 36% YoY). Top-line growth and EBITDA margin expansion was led by 45% growth in pharma biz & 18% growth in ingredients biz. Favorable impact of INR dep was at 8% in the top-line growth. Going forward, company has guided for top-line CAGR of 20% for FY12-FY15 on back of strong growth in pharma biz and increased capacity utilization in the ingredients biz. Stock is trading at attractive valuations of 5xFY14E EPS & 5x FY14E EV/EBITDA and with earnings CAGR of 26% over FY12- 14E, we maintain Buy with a target price of Rs340.”

“Company has guided for 20-22% revenue growth in FY13 with EBITDA margins to sustain at 21%. Company is aiming at debt to equity at 1 against current level of 1.7. Jubilant has commissioned a 10,000 mt plant for Vitamin B3 (Niacin/ Niacinamide) in H2’FY12. Although there are pricing pressures, cost advantage owing to scale, vertical integration in Beta picoline & tax incentives should help in gaining mkt share. In case of Symtet, the trials have started and the plant is under stabilization phase. We expect the plant to come on-stream in H2FY13. At full capacity utilization- management expects Niacinamide and Symtet plant to generate USD70mn and USD90mn respectively over the next 2-3 years.”

“We expect Jubilant to report 17% revenue growth in FY13 and 16% growth in FY14. We expect EBIDTA margins to improve from 19.8% in FY12 to 20.3% in FY13 and 20.7% in FY14. Earnings will grow by 26% CAGR over FY12-14E. We value the company at 9x FY13 EV/EBITDA with a target price of Rs340 and BUY rating. At CMP, the stock trades 5.1xFY14E EPS & 5.1xFY14E EV/ EBITDA,” says Emkay Global Financial Services research report. 

Institutional holding more than 40% in Indian cos

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