Buy Jubilant Life Sciences, target Rs 1004: ICICI Securities

ICICI Securities has a buy call on Jubilant Life Sciences Ltd. with a target price of Rs 1004. The current market price of Jubilant Life Sciences Ltd. is Rs 854.5. Time period given by the brokerage is a year when Jubilant Life Sciences Ltd. price can reach defined target.
Jubilant Life Sciences Ltd., incorporated in 1978, is a large-cap company with a market cap of Rs 13735.61 crore.

Investment rationale by ICICI Securities


Jubilant Life Sciences (JLS) reported Q4FY18 performance above our estimates on all fronts. Revenue grew 40.9% YoY to Rs22.5bn (I-sec est. Rs19.8bn) led by strong growth in LSI business and integration of Triad Isotopes acquisition. Adjusted PAT grew 50.5% YoY to Rs2.3bn (I-sec est. Rs1.7bn). EBITDA margins improved 120bps YoY to 20.3% (I-sec est. 20.5%) due to 370bps fall in other operating expenses. We remain positive on the stock considering strong growth potential of specialty pharma business, gradual pick up in revenue from Rubyfill in US, improving revenue mix with higher contribution of specialty pharma business and reduction in interest cost with de-leveraging of balance sheet. We marginally revise our estimates by 2-3% in revenue and 0-1% in PAT for FY18-19 to factor in better Q4FY18 and higher capex expectation. Recent correction in stock price (>10% in last 3 months) has made the valuation attractive, hence, we upgrade the stock to BUY from Add with revised target price of Rs1,004/share (earlier Rs1,015).