Jubilant Life Sciences’ Multi-Fold Profit Growth Has Street Cheering

Shares of Jubilant Life Sciences rose the most in over four months after the integrated pharma and life sciences company reported a multi-fold growth in net profit in the January-March quarter, way ahead of analyst estimates.

Net profit grew 1,272 percent to Rs 149.03 crore during the January-March quarter, aided by lower depreciation costs and tax expenses, according to its filing on the stock exchanges. The company had reported a net profit of Rs 10.86 crore in the corresponding quarter last year.

Revenue increased 8.3 percent to Rs 1,641.42 crore on a year-on-year basis. Earnings before interest, tax, depreciation and amortisation rose 4 percent to Rs 304.98 crore while EBITDA margins contracted 70 basis points to 18.6 percent.

Segmental Performance

Revenue from the pharmaceutical business grew 3 percent year-on-year to Rs 808 crore while that of life science ingredients rose 13 percent to Rs 782 crore in the same period. The latter contributed nearly half of the total revenue of the company. EBITDA margins in life science ingredients remained stable on account of pricing improvement in certain key businesses offset by increase in raw material input costs, the company said. Revenue for drug discovery solutions revenues rose 27 percent year-on-year to Rs 51 crore, contributing 3 percent to the total revenue.

The company reduced the net debt for the quarter by Rs 54 crore. The lower debt and strong operating cash flow generation could deliver better results, the company said in its exchange filing.

The company guided for better revenue and profitability in financial year 2017-18, led strategic acquisitions and new product launches.

Its subsidiary, Jubilant Pharma Ltd., Singapore, will evaluate the option to raise funds through an initial public offering (IPO) by listing on an international stock exchange, including Singapore, in the current financial year, the filing added. The offer will include an equity dilution of not more than 15 percent and will help strengthen the balance sheet, Jubilant Life Sciences said.

All the thirteen analysts tracked by Bloomberg have a ‘buy’ rating on the stock and a consensus 12-month price target of Rs 897, implying a potential upside of 22 percent from the current market price.

Shares rose nearly 13 percent to Rs 762.70 on the National Stock Exchange, making Jubilant Life Sciences the best performer on the Nifty 500 index.