Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jubilant Life Sciences (JOL)
Pharmaceuticals
Disappointing quarter. While sales were in line, EBITDA margin at 15.4% was down
350 bps qoq and below our est. of 18% due to (1) steep margin dip in services business
and (2) sequential decline of around 150 bps in margin of products business (80% of
sales) which is perplexing, given (1) 7% qoq increase in its sales, (2) sequential
improvement in selling pricing and (3) adequate raw material inventory. We cut our
FY2011-12E est. by 16-30% to account for (1) acute margin pressure the business is
facing and (2) poor revenue generation (5% in 9MFY11 excl. one-time H1N1 business
last year) and (3) increase in interest cost on account of FCCB repayment in May 2011E.
We downgrade to REDUCE with PT of Rs220 (from Rs350), 13X FY2012E.
3QFY11 revenues up 2% qoq, in line with our estimate
Sales at Rs8.7 bn were in line with our estimate with (1) services business (19% of sales)
underperforming, down 14% qoq due to delay in customer approvals in CMO business and delay
in milestone fees and (2) products business of lifecycle ingredients/generics was higher than our
est. by 5% and up 13% yoy with volume growth at 17%, indicating pricing pressure still remains
despite price improvement sequentially.
EBITDA margin at 15% was lower than our estimate of 18% and down 350 bps qoq
EBITDA margin excluding other income was down 350 bps qoq to 15% on account of (1) negative
margin in services business in 3QFY11 versus 2.6% in 9MFY11 due to postponement of milestone
income and (2) lower margin in products business at 22.8% in 3QFY11 versus 23.3% in 9MFY11,
implying that pricing pressure in pyridine and chemicals business still remains. This is despite this
business witnessing (1) 7% qoq increase in sales, (2) sequential improvement in selling pricing and
(3) adequate raw material inventory.
We cut our FY2011-12E est. by 16-30%
We cut our FY2011-12E est. by 16-30% to account for (1) acute margin pressure faced by the
services business. Our analysis shows EBITDA margin in services business excl. high-margin contract
of H1N1 was 10-12% in 9MFY10 which has collapsed to 3% in 9MFY11. We believe steady state
margin of 16-18% outlined by Jubilant is contingent upon healthy revenue generation, which has
not been seen YTD, with DDDS facing sales dip of 20% in 9MFY11 and sequential decline in CMO
business in 3QFY11, (2) poor revenue generation (5% in 9MFY11 excl. one-time H1N1 business)
and (3) increase in interest cost on account of inc. in debt to repay FFCB in May 2011E.
We downgrade to REDUCE from BUY with PT of Rs220 (from Rs350), 13X FY2012E
We believe the key revenue drivers are some time away—(1) new launches in APIs, the two major
sartans Jubilant has filed DMF for expire only in 2012E and (2) revenue generation from capacity in
pyridines is likely in 2HFY12-13E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jubilant Life Sciences (JOL)
Pharmaceuticals
Disappointing quarter. While sales were in line, EBITDA margin at 15.4% was down
350 bps qoq and below our est. of 18% due to (1) steep margin dip in services business
and (2) sequential decline of around 150 bps in margin of products business (80% of
sales) which is perplexing, given (1) 7% qoq increase in its sales, (2) sequential
improvement in selling pricing and (3) adequate raw material inventory. We cut our
FY2011-12E est. by 16-30% to account for (1) acute margin pressure the business is
facing and (2) poor revenue generation (5% in 9MFY11 excl. one-time H1N1 business
last year) and (3) increase in interest cost on account of FCCB repayment in May 2011E.
We downgrade to REDUCE with PT of Rs220 (from Rs350), 13X FY2012E.
3QFY11 revenues up 2% qoq, in line with our estimate
Sales at Rs8.7 bn were in line with our estimate with (1) services business (19% of sales)
underperforming, down 14% qoq due to delay in customer approvals in CMO business and delay
in milestone fees and (2) products business of lifecycle ingredients/generics was higher than our
est. by 5% and up 13% yoy with volume growth at 17%, indicating pricing pressure still remains
despite price improvement sequentially.
EBITDA margin at 15% was lower than our estimate of 18% and down 350 bps qoq
EBITDA margin excluding other income was down 350 bps qoq to 15% on account of (1) negative
margin in services business in 3QFY11 versus 2.6% in 9MFY11 due to postponement of milestone
income and (2) lower margin in products business at 22.8% in 3QFY11 versus 23.3% in 9MFY11,
implying that pricing pressure in pyridine and chemicals business still remains. This is despite this
business witnessing (1) 7% qoq increase in sales, (2) sequential improvement in selling pricing and
(3) adequate raw material inventory.
We cut our FY2011-12E est. by 16-30%
We cut our FY2011-12E est. by 16-30% to account for (1) acute margin pressure faced by the
services business. Our analysis shows EBITDA margin in services business excl. high-margin contract
of H1N1 was 10-12% in 9MFY10 which has collapsed to 3% in 9MFY11. We believe steady state
margin of 16-18% outlined by Jubilant is contingent upon healthy revenue generation, which has
not been seen YTD, with DDDS facing sales dip of 20% in 9MFY11 and sequential decline in CMO
business in 3QFY11, (2) poor revenue generation (5% in 9MFY11 excl. one-time H1N1 business)
and (3) increase in interest cost on account of inc. in debt to repay FFCB in May 2011E.
We downgrade to REDUCE from BUY with PT of Rs220 (from Rs350), 13X FY2012E
We believe the key revenue drivers are some time away—(1) new launches in APIs, the two major
sartans Jubilant has filed DMF for expire only in 2012E and (2) revenue generation from capacity in
pyridines is likely in 2HFY12-13E.
No comments:
Post a Comment