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Currency depreciation, Cadista, Neutraceuticals and API to drive growth
On the positive side, we believe JOL's performance in the quarter will be assisted by
currency depreciation and some pickup in neutraceuticals and API sales (sartans).
However, we expect some sequential moderation in Cadista performance and Lipitor
formulation contract for Japan. We understand JOL has extended the contract that will
restart the Japan Lipitor generic contract again from 4QFY12. In 2QFY12, the generics
business performance was largely driven by Cadista, which benefited from higher prices
in specific products like Methylprednisolone. Methylprednisolone tablet sales for Cadista
increased by USD18mn q-q in 2QFY12. Our interaction with the management suggests
that for the generic segment there could be some slowdown sequentially, but y-y growth
is likely to remain robust. We factor in 25% y-y growth in revenues.
Building in some moderations in margins q-q
In 2QFY12, JOL reported its highest-ever EBITDA, largely driven by strong performance
at Cadista, in our view. Cadista EBITDA improved by almost USD15mn in 2QFY12 q-q,
in our view. As we factor in some sequential drop in Cadista performance, we project
EBITDA margin at 20.6% compared to 22.7% in 2QFY12, but is significantly higher than
15% recorded in the year ago period. We have factored in INR650mn in forex losses, in
line with what was reported in the previous quarter. However, the reported losses could
be lower if company decides to implement the new rule 46A, which allows companies to
amortise losses over March 2020. As per the company in September 2011, foreign debt
was ~USD540mn (including FCCB), or 85% of the outstanding gross debt.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Currency depreciation, Cadista, Neutraceuticals and API to drive growth
On the positive side, we believe JOL's performance in the quarter will be assisted by
currency depreciation and some pickup in neutraceuticals and API sales (sartans).
However, we expect some sequential moderation in Cadista performance and Lipitor
formulation contract for Japan. We understand JOL has extended the contract that will
restart the Japan Lipitor generic contract again from 4QFY12. In 2QFY12, the generics
business performance was largely driven by Cadista, which benefited from higher prices
in specific products like Methylprednisolone. Methylprednisolone tablet sales for Cadista
increased by USD18mn q-q in 2QFY12. Our interaction with the management suggests
that for the generic segment there could be some slowdown sequentially, but y-y growth
is likely to remain robust. We factor in 25% y-y growth in revenues.
Building in some moderations in margins q-q
In 2QFY12, JOL reported its highest-ever EBITDA, largely driven by strong performance
at Cadista, in our view. Cadista EBITDA improved by almost USD15mn in 2QFY12 q-q,
in our view. As we factor in some sequential drop in Cadista performance, we project
EBITDA margin at 20.6% compared to 22.7% in 2QFY12, but is significantly higher than
15% recorded in the year ago period. We have factored in INR650mn in forex losses, in
line with what was reported in the previous quarter. However, the reported losses could
be lower if company decides to implement the new rule 46A, which allows companies to
amortise losses over March 2020. As per the company in September 2011, foreign debt
was ~USD540mn (including FCCB), or 85% of the outstanding gross debt.
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