Jubilant Life Sciences - Pain persists, recovery still few quarters away ::Emkay

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Jubilant Life Sciences

Pain persists, recovery still few quarters away

Hold

CMP: Rs 159                                        Target Price: Rs 144

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n     Jubilant’s Q4FY11 numbers were disappointing with a) Net sales decline by 10% YoY to Rs8.9bn, b) EBITDA decline by 41% to Rs1.3bn, and c) APAT down 42% to Rs771 mn

n     Service business declined in revenues (-32% YoY) and EBITDA margins (10.3% vs. 17.0% YoY). Product business was up 12%, but EBITDA margins were lower (19.6% vs. 30.3% YoY)

n     Turn-around in Services business and easing of pricing pressures in Product business are still few quarters away

n     We downgrade the stock one-notch to Hold with a target price of Rs144 (8.5xFY12E EV/EBITDA)