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Jubilant Life Sciences
Growth momentum continues
Mrs. Nidhi Aggarwal – Senior V.P. Investor Relations shared her view
on the industry and the company
Key Highlights
n US$80mn contract for Symtet - Jubilant Life has signed a long term supply
agreement in Proprietary Products business for Symtet with a leading international
Life Sciences company. The total contract is valued at over US$ 80 mn to be
supplied in 3 years starting from Q1FY13.
n US$70mn contract in CMO business - Jubilant’s North American subsidiary,
Jubilant HollisterStier, has entered into a multi year contract with a leading US
pharma company to manufacture a prominent over the counter (OTC) women health
and personal care product at its Montreal facility. This contract spans for a period of
over 4 years with a possibility of extension for another 2 years for a higher quantity.
The production of the product has already started in Sept’ 2011
n Jubilant has expanded its Pyridine capacity by another 20% to 55000 tons and now
has a global leadership position. This will help the company in backward integration
for Symtet and Vitamn B3 production. This plant will also produce other value added
products such as – Niacin, Niacinamide and Symtet. This will help the company to
expand margins
n Symtet plant is likely to be commissioned by Q4FY12. Niacinamide plant (10,000 mt)
has already been commissioned in Oct’11 and the company has plans to achieve 20-
25% capacity utilization in FY12. Jubilant is the largest producers of Beta-picoline,
which is the key raw material used for production of Niacin/Niacinamide. Cost
advantage owing to scale, vertical integration in Beta picoline and tax incentives (as
this plant is set up in an SEZ in Gujarat) should help it to gain market share
n For the generic business – Strong pipeline of 40 ANDAs backed by own APIs,
contract with a Japanese company for supply of API and CVS formulation & more
than 25 launches in regulated markets will drive revenues
n Guidance – The Company expects sales growth of 18-20% in FY12. Increase in
capacity utilization and cost optimization will help Jubilant Life to maintain EBITDA
margins at 20-22% going ahead. Capex of Rs5bn planned for FY12, expected to
generate revenue of over Rs12bn at full capacity utilisation
n Concerns on leverage will be addressed by lowered capex spends over next 3 years
- restricting it to Rs9bn. The company has ~Rs16bn debt in Re terms and US$415mn
in foreign currency. Company is targeting net debt / equity of 1:1 led by increasing
profitability
Valuations
We expect Jubilant to report 12% revenue growth in FY12 and 20% growth in FY13. We
expect EBIDTA margins to improve from 16.1% in FY11 to 19.1% in FY12 and 19.3% in
FY13. Earnings will grow by 21% CAGR over FY11-13E. We value the company at 10x
FY13 EV/EBITDA with a target price of Rs359 and BUY rating. At CMP, the stock trades
at 11xFY12E EPS of Rs17.7 and 8XFY13E EPS of Rs25
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jubilant Life Sciences
Growth momentum continues
Mrs. Nidhi Aggarwal – Senior V.P. Investor Relations shared her view
on the industry and the company
Key Highlights
n US$80mn contract for Symtet - Jubilant Life has signed a long term supply
agreement in Proprietary Products business for Symtet with a leading international
Life Sciences company. The total contract is valued at over US$ 80 mn to be
supplied in 3 years starting from Q1FY13.
n US$70mn contract in CMO business - Jubilant’s North American subsidiary,
Jubilant HollisterStier, has entered into a multi year contract with a leading US
pharma company to manufacture a prominent over the counter (OTC) women health
and personal care product at its Montreal facility. This contract spans for a period of
over 4 years with a possibility of extension for another 2 years for a higher quantity.
The production of the product has already started in Sept’ 2011
n Jubilant has expanded its Pyridine capacity by another 20% to 55000 tons and now
has a global leadership position. This will help the company in backward integration
for Symtet and Vitamn B3 production. This plant will also produce other value added
products such as – Niacin, Niacinamide and Symtet. This will help the company to
expand margins
n Symtet plant is likely to be commissioned by Q4FY12. Niacinamide plant (10,000 mt)
has already been commissioned in Oct’11 and the company has plans to achieve 20-
25% capacity utilization in FY12. Jubilant is the largest producers of Beta-picoline,
which is the key raw material used for production of Niacin/Niacinamide. Cost
advantage owing to scale, vertical integration in Beta picoline and tax incentives (as
this plant is set up in an SEZ in Gujarat) should help it to gain market share
n For the generic business – Strong pipeline of 40 ANDAs backed by own APIs,
contract with a Japanese company for supply of API and CVS formulation & more
than 25 launches in regulated markets will drive revenues
n Guidance – The Company expects sales growth of 18-20% in FY12. Increase in
capacity utilization and cost optimization will help Jubilant Life to maintain EBITDA
margins at 20-22% going ahead. Capex of Rs5bn planned for FY12, expected to
generate revenue of over Rs12bn at full capacity utilisation
n Concerns on leverage will be addressed by lowered capex spends over next 3 years
- restricting it to Rs9bn. The company has ~Rs16bn debt in Re terms and US$415mn
in foreign currency. Company is targeting net debt / equity of 1:1 led by increasing
profitability
Valuations
We expect Jubilant to report 12% revenue growth in FY12 and 20% growth in FY13. We
expect EBIDTA margins to improve from 16.1% in FY11 to 19.1% in FY12 and 19.3% in
FY13. Earnings will grow by 21% CAGR over FY11-13E. We value the company at 10x
FY13 EV/EBITDA with a target price of Rs359 and BUY rating. At CMP, the stock trades
at 11xFY12E EPS of Rs17.7 and 8XFY13E EPS of Rs25
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