4 JUBILANT share price target reports by brokerages below. See what is analyst's view on JUBILANT share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
In the current quarter, the Pharma business reported an adjusted EBITDA of Rs4,110mn, while LSI business EBTIDA stood at Rs1,000 mn. The company has filed the composite Scheme of Arrangement with exchanges and is awaiting response. Once NOC is received from exchanges the company will file it with the National Company Law Tribunal (NCLT) for its approval. Post the scheme becoming effective, the Life Science Ingredients business will stand demerged into the resulting entity, which will be listed on NSE and BSE with a mirror shareholding of JLL. We have maintained our financial estimates on JLS for FY20, FY21 and FY22. We have maintained a target P/E multiple of 12x to arrive at a target price (TP) of Rs792.
JUBILANT guided for favourable outcome of legal issues in Ruby-fill, new capacity in CDMO and FDA resolution of regulatory issues which may help in back-ended revenue growth in FY22E. The company however maintained heavy capex in FY21E. In our SOTP valuation, we increased EV/EBITDA of pharma business to 5.5x (from 5x) of FY22E while same for LSI maintained at 3x for commoditized LSI business. This has derived new TP of Rs488 (from Rs433). We maintain Reduce.
We have revised our financial estimates on JLS for FY20 and FY21 to account for the revised prices in the commodity chemicals business. We have also made minor changes in our costs related assumptions. We have rolled over the valuation to September FY22 with a target P/E multiple of 12x to arrive at a target price (TP) of Rs792 (from Rs834 earlier).
JUBILANT raised US$200m debt and prepaid US$135m FCCB from IFC Washington. Its net debt reduced by Rs1.49bn in Q2FY20. Management has proposed demerger of Pharma and LSI business to unlock value of both the businesses, though shareholding to reflect mirror image. It guided for nine months to complete the process with approval from NCLT. Management plans to remain in old tax regime with guidance of effective annual tax outflow of 25% while reported tax liability to be 29-30%. We maintain ‘Reduce’ recommendation and retain TP at Rs433.
Concerns overplayed We maintain BUY on JUBILANT following an 8/12% beat on our EBITDA/PAT estimates for 1QFY20. Our TP is revised at Rs 845 (12x Jun-21E EPS) with a 5/10% cut to our FY20/21E EPS due to higher interest cost and tax rate.
We revise our financial estimates on JLS for FY20 and FY21 to account for the revised prices in commodity chemicals business, ongoing impact of remediation measures on supply of API / solid dosage business and lower our estimates for Ruby fill for FY21. lower our target P/E multiple to 12x from 13x and arrive at a target price (TP) of Rs785.
We expect the pharma business to be stable as RubyFill is gaining market share. However, considering Roorkee WL, pressure on LSI, and a higher tax rate, we have a negative view for FY20 than our earlier assumption. We expectthe improving situation for Vitamin B3 and CMO’s additional capacities(starting a second line in H2FY20, commissioning Lyo in FY20) to provide aid tothe company’s performance. Considering the recent correction in the market,we have a BUY rating, with a TP of Rs 750 (10x FY21E EPS).
We reduce our EPS estimate by 5%/7% for FY20/21 to factor in remediation cost associated with compliance in the pharma segment, further penalties associated with non-supplies to customers, and reduced prices in LSI products. We also reduce EV/EBITDA multiple for pharma to 9x (prior: 10x) and for LSI to 5x (prior: 6x) to factor in (a) regulatory risk in the pharma segment, (b) gradual pick-up in radio-pharma, and (c) subdued outlook for the Life Science Chemical Segment. Accordingly, we roll our price target to INR800 on SOTP-based valuation. At CMP of INR595, JUBILANT trades at an attractive valuation of 6.3x FY20 EV/EBITDA and 5.7x FY21 EV/EBITDA. Maintain Buy.
We expect specialty pharma to maintain growth momentum thanks strong growth and prospects for CDMO business. However, Official action Indicated (OAI) status to Nanjangud API facility is a likely stumbling block in the near term. Similarly, on the generics front, we expect some slowdown and costs escalation on account of warning letter to Roorkee facility. On the LSI front, despite inventory adjustment, EBITDA margins were disappointing and things are unlikely to improve in the next few quarters. In this backdrop, the performance pharma will be the main lever in the near future. We cut our EPS estimates by ~20% in both FY20 and FY21 due to these factors. We arrive at our target price of ~| 710 based on 10x FY21E EPS of Rs 70.8.
We cut our earnings estimates by 2.2% and 3.9% in FY20E and FY21E respectively, following assumptions of lower sales growth in US formulation. We expect that negative impact of the event as well as raising new debt capital will result in compression of PE multiples. We reduce assigned EV/EBTIDA to 7.5x (from 8.5x) on FY21E in our SOTP valuations of the company. The current valuation reflects all possible positive developments in the near to medium term. With muted demand offtake in chemical biz (LSI), higher leverage and regulatory uncertainties, we downgrade our recommendation to ‘Reduce’ and lower TP to Rs703 (Rs822 earlier).
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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