Jubilant Life Sciences Posts Robust Q3FY12 Results

Jubilant Life Sciences, a 3500 crore market cap company, reported its third quarter earnings for FY13 today (Jan 29). The company has reported a 19.38% growth in its sales to touch Rs 1302 crore.

Its net profit surged to Rs 39 crore despite a mark-to-market (MTM) loss of Rs 71 crore as its Rupee loan of Rs 910 crore was swapped for a USD loan. The normalised net profit was up 27% to Rs 98 crore. In the Dec 2011 quarter, the company had reported an MTM loss of Rs 155 crore, due to which it had posted a loss of Rs 78 crore.

Jubilant has said that the higher profits during the quarter were due to strong volumes growth. It also mentioned that its strategy of enhancing presence in certain international markets has paid off well.

Its EBITDA margins jumped to 19.89% as compared to that of 19.05% reported a year earlier. The margin expansion has been due to lower input costs (material and employee costs) both. The total expenses grew by 18% to Rs 1046 crore, which lifted the EBITDA margins by 84 bps. In the Sept quarter of the current fiscal, the company had reported a drop in its EBITDA margins but the net profit expanded nearly twofold due to foreign exchange gains.

The revenues from the Pharmaceuticals segment increased by 18% to Rs 665 crore. This segment contributes 51% to its total revenues. The EBITDA margins from this segment improved from 25.3% to 29.4% on a year on year basis. It also has a total 50 ANDA filings in USA, with 25 approvals so far. In Europe, it has 41 dossier filings with 33 approvals. Significant filings have also been made in Canada and in the Rest of the World markets.

Its other segment, Life Science Ingredients, which contributes 49% to the topline, has also jumped by 20% on a YoY basis to Rs 641 crore. The EBITDA margins therein also posted a jump of 40 basis points, indicating a robust business performance.

The exports revenues grew by 25% to Rs 962 crore. In the period under question, the revenues from US, Japan, Canada and Europe went up by 26%. During the quarter, Jubilant launched two products in Europe and Canada. There was also an improvement in its Radiopharmaceuticals and Allergy Therapy businesses. Recently, it has received a new order worth USD 77 million to manufacture injectables over the next 5 years.

As the company has repaid some of its debt in the last nine months, its debt-to-equity ratio has come down to 1.3x from 1.5x in Mar 2012. With no major capex planned in the year, the debt level would come down further, and hence there is a greater scope of expansion in this ratio. Jubilant has said that it will see a 20% growth in the year, with a sustainable EBITDA margin of 21% going ahead.

On its normalised trailing 12-month EPS of Rs 25.08, the stock is trading at a Price to Earnings ratio of 8.7x, which is considered cheap as compared to its peer group. We advise entering the counter with a long-term perspective in view.