Anand Rathi is bullish on Jubilant Life Sciences has recommended buy rating on the stock with a target price of Rs 867 in its research report dated June 12, 2020.
Anand Rathi 's research report on Jubilant Life Sciences
JLS revenue from operations came in at Rs.2,391 cr in Q4-FY20, up by 0.2% YoY. This was on account of growth in Pharmaceuticals business partially offset by decline in Life Science Ingredients (LSI) business. Pharmaceuticals revenue came in at Rs.1,483 cr in Q4-FY20, an increase of 6% yoy whereas LSI revenue came in at Rs.823 cr in Q4-FY20, down by 10% yoy. Drug Discovery & Development Solution segment revenue came in at Rs.85 cr, up by 25% YoY. On profitability front, the EBITDA from operations for the quarter improved by 49.9% year-on-year to Rs.537 cr. EBITDA margins expanded by 743 bps yoy to 22.4%. Margin expansion was mainly on account of lower raw material and other expenditure. Net Profit came in at Rs.260 cr in Q4-FY20 as compared to loss of Rs.99 cr in Q4-FY19. Q4-FY19 had a IFC stock settlement charge of INR235 cr classified as an exceptional item. Normalized profit after tax during the quarter was at Rs.260 cr as against Rs.135 cr in Q4-FY19.
Fundamentally JLS Pharma business is positioned well in the current environment which bodes well for companies having a manufacturing footprint in the US and India both. Moreover, the demerger of LSI business will allow value unlocking for the Pharma business valuation. We continue to remain positive on the company on a medium to longer term perspective and maintain our BUY rating on the stock with a target price of Rs.867 per share.
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