Buy Jubilant Life Sciences; target of Rs 855: Motilal Oswal

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Motilal Oswal 's research report on Jubilant Life Sciences

Jubilant Life Sciences (JLS) delivered higher-than-expected 2QFY21 earnings, led by better traction in a) the CMO/Generics category in the Pharma segment and b) the Life Science Chemical category in the Life Science Ingredient (LSI) segment. The Remdesivir launch further supported growth in the Pharma segment. However, we maintain our earnings estimate for FY21/FY22, factoring in COVID-led prolonged weakness in the Radiopharma segment. We also reduce the Pharma segment’s 12M forward EV/EBITDA to 8x (from 9x earlier), considering increased competition in the Radiopharma business.

Outlook

We continue to value the LSI business at 4x 12M forward EV/EBITDA and arrive at SOTP-based Target Price of INR855. We remain positive on account of a) a better outlook for the Specialty/CMO/LSI segment and an attractive valuation. Maintain Buy.

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