Result Update

February 11, 2016

Jubilant Life Sciences (VAMORG)

Rating matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

Hold
| 375
15-18 months
10%

Margins solid but revenue growth slips again

Whats Changed?
Target
EPS FY16E
EPS FY17E
EPS FY18E
Rating

Changed from | 460 to | 375

Changed from | 28.7 to | 31.0
Changed from | 40.6 to | 41.3
Changed from | 53.9 to | 55.1
Unchanged

Quarterly Performance
Revenue
EBITDA
EBITDA (%)
Adj. Net Profit

Q3FY16
1,379.5
307.5
22.3
120.2

Q3FY15
1,445.5
185.3
12.8
-11.0

YoY (%)
-4.6
66.0
947 bps
LP

Q2FY16
1,463.1
320.6
21.9
113.5

QoQ (%)
-5.7
-4.1
38 bps
5.9

FY15
5826.3
689.3
-57.8
-3.6
-0.6

FY16E
5798.7
1298.1
494.2
31.0
31.0

FY17E
6580.9
1490.5
658.4
41.3
41.3

FY18E
7415.6
1743.7
877.1
55.1
55.1

FY15
NA
14.3
14.2
2.2
-0.4
5.8

FY16E
11.0
7.3
7.2
1.9
17.1
13.3

FY17E
8.3
5.9
5.9
1.6
18.9
15.4

FY18E
6.2
4.7
4.7
1.3
20.4
17.7

Key Financials
(| crore)
Revenues
EBITDA
Net Profit
EPS (|)
Adjusted EPS (|)

Valuation summary
PE (x)
EV to EBITDA (x)
Tar. EV/EBITDA (x)
Price to book (x)
RoNW (%)
RoCE (%)

Stock data
Particular
Market Capitalisation
Debt (FY15)
Cash (FY15)
EV
52 week H/L
Equity capital
Face value

Amount
| 5212 crore
| 4792 crore
| 394 crore
| 9609 crore
455\138
| 15.9 crore
|1

Price performance (%)

Jubilant Life Sciences
Divi's Labs
Aurobindo Pharma

1M
-17.4
-3.2
-11.6

3M
-12.5
-3.8
-6.8

| 342

6M
27.4
11.2
0.0

1Y
112.9
36.9
32.6

Research Analyst
Siddhant Khandekar
siddhant.khandekar@icicisecurities.com
Mitesh Shah
mitesh.sha@icicisecurities.com
Nandan Kamat
nandan.kamat@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

Revenues de-grew 4.6% YoY to | 1379.5 crore (I-direct estimate:

| 1490 crore). Revenues in the pharmaceutical business grew 3.8%
YoY to | 727.8 crore (I-direct estimate: | 757.1 crore) while life
science ingredients (LSI) revenues de-grew 12.2% YoY to | 653.1
crore (I-direct estimate: | 714.2 crore)
EBITDA margins increased ~947 bps YoY to 22.3% (I-direct
estimates: 22.1%) on the back of a 1020 bps YoY increase in the
pharmaceutical sector EBITDA margins to 30.1% and 730 bps YoY
increase in LSI margins to 15.5%
Adjusted net profit was at | 120.2 crore (I-direct estimate: | 122.5
crore) vs. | 4.6 crore loss in Q3FY15 on the back of a robust
operational performance and lower taxation
Pharmaceuticals business segment getting back to normal
The pharmaceuticals business has grown at a CAGR of ~15% in FY11-15
driven by generics and specialty pharma. However, pricing pressure in
the drug discovery business and some formulations in the US have put
consistent pressure on the EBITDA margins of the pharma business. In
addition, expenses at the US based Spoken facility to address the USFDA
warning letter and subsequent postponement of shipment have led to
further deterioration in financials. However, of late, the margin scenario is
getting back to normal on the back of generic launches in the US,
launches in the specialty pharma space and successful resolution of the
two CMO facilities. We expect pharma to grow at a CAGR of 14.4% in
FY15-18E to | 4020.7 crore.
LSI segment mostly commoditised but offers stable returns
Life science ingredients (LSI) cater to more routine customers with
committed requirements. Because of the commodity nature, margins in
this segment are ~15-16%. Business has grown at ~14% CAGR in FY1115. Of late, however, this segment has been facing issues due to
regulatory changes in China and pricing pressure in some sub-segments.
We expect LSI to grow at 1.8% CAGR in FY15-18E to | 3321.4 crore.
Integrated CRAMS player but struggling due to legacy debt burden
Jubilant is one of the few Indian CRAMS players with a vertically
integrated business model. However, in its pursuit of building capacity
and creating multiple revenue heads, the debt situation has not improved
over the years. As most debt had been US$ denominated, the sharp
rupee depreciation over two or three years worsened the debt situation
further. Similarly, it has not seen meaningful cash flows due to margin
pressure. Hence, D/E and debt/EBITDA ratios remained at elevated levels.
Crude-connection hurting overall growth; maintain HOLD
Q3 revenues were mainly impacted by a decline in the LSI segment
caused by lower crude prices. Despite a marked improvement in the
margin scenario in 9MFY16, revenues remained flat YoY due to ~12%
decline in the LSI segment, which has overshadowed 15% pharma
growth. Pharmaceutical business growth is likely to sustain on the back of
robust US sales and other sub-segments but LSI segment growth
prospects remain hazy due to lower oil prices and regulatory changes.
With only one engine working at full throttle, the legacy debt issue is
likely to weigh on investors sentiments in the near term. Note that
leverage issues have improved only marginally and there remains a long
journey ahead. We have ascribed a target price of | 375 based on 5x (6x
earlier) FY18 EV/EBITDA.

Variance analysis
Q3FY16 Q3FY16E
1,379.5 1,490.0

Revenue

Q3FY15
1,445.5

Q2FY16
1,463.1

YoY (%) QoQ (%)

-4.6
-5.7

Comments
YoY de-growth mainly due to 12.2% decline in LSI business. Pharmaceutical
business grew mere 3.8% to | 727.8 crore. Miss vis--vis our expectations was
due to lower-than-expected sales in the US, China and RoW markets

Raw Material Expenses

481.7

543.8

622.5

530.3

-22.6

-9.2

Employee Expenses
Other Expenditure

283.2
220.4

283.1
231.9

271.7
267.0

285.1
227.7

4.2
-17.5

-0.7
-3.2

86.6
1,071.9
307.5
22.3

102.0
1,160.8
329.2
22.1

98.9
1,260.2
185.3
12.8

99.3
-12.4
1,142.5
-14.9
320.6
66.0
21.9 947 bps

-12.8
-6.2
-4.1
38 bps

Interest
Depreciation
Other income
Forex loss / (gain)
PBT after Exceptional Items
Tax
Tax Rate (%)
PAT before MI
MI

92.5
74.7
2.9
3.2
140.0
23.0
16.5
116.9
0.0

97.4
75.1
4.6
0.0
161.2
38.7
24.0
122.5
0.0

96.1
79.5
6.1
0.2
15.6
20.2
129.6
-4.6
6.5

97.4
75.1
4.5
-2.3
154.8
39.0
25.2
115.8
0.0

-3.7
-6.1
-52.9
1,605.3
797.2
13.9
1.7
LP
0.0

-5.0
-0.6
-36.2
LP
-9.6
-41.0
426.4
1.0
0.0

Adj. Net Profit

Key Metrics
Pharmaceuticals

120.2

122.5

-11.0

113.5

LP

5.9

727.8

757.1

701.0

748.0

3.8

-2.7

Revenue YoY growth mainly driven by CMO of sterile injectables. Volume growth
of 6% YoY led by strong volume growth in solid dosage formulations. Miss vis-avis our expectations was mainly due to lower-than-expected sales in the US

Life Science Ingredients

653.1

714.2

744.0

715.0

-12.2

-8.7

De-growth was mainly due to a decline in life science chemicals segment led by
lower crude prices

Power cost
Total Expenditure
EBITDA
EBITDA (%)

YoY decline mainly due to better operational efficiencies and better price
realisation

Pharma business margin improved to 30.1% from 19.9% in Q3FY15 while LSI
business margin increased to 15.5% from 8.2% in Q3FY15

The sharp increase in net profit was mainly due to a robust operational
performance

Source: Company, ICICIdirect.com Research

Change in estimates
(| Crore)
Revenue

Old
6,793.3

FY17E
New % Change
6,580.9
-3.1

Old
7,652.5

FY18E
New % Change
7,415.6
-3.1

EBITDA
EBITDA Margin (%)
PAT
EPS (|)

1,450.1
21.3
647.0
40.6

1,490.5
22.6
658.4
41.3

1,697.7
22.2
859.2
53.9

1,743.7
23.5
877.1
55.1

2.8
135 bps
1.8
1.8

2.7
133 bps
2.1
2.1

Comments
Trimmed down LSI segment's revenue expectations due to corelation with global crude
oil prices
Increased margin expectations mainly due to improvement in product mix
Increased PAT expectations mainly in sync with EBITDA margin

Source: Company, ICICIdirect.com Research

Assumptions

Pharmaceuticals
Life Science Ingredients

FY15
2,682.0
3,148.2

FY16E
3,040.2
2,745.0

Current
FY17E
FY18E
3,496.3 4,020.7
3,019.5 3,321.4

Earlier
FY17E
FY18E
3,562.2 4,096.5
3,163.9 3,480.2

Trimmed down LSI segment's revenue expectations due to correlation with global
crude oil prices

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 2

Company Analysis
Incorporated in 1978, Jubilant Life Sciences (JLS; formerly Jubilant
Organosys), is a mid-sized integrated chemicals turned pharmaceuticals
player. It started as a full fledged chemical company by entering the vinyl
acetate monomer (VAM) business in 1983. Broadly, the company
operates through two business segments - pharmaceuticals (46% of the
turnover) and life science ingredients (54% of turnover). The
pharmaceuticals segment consists of sub-segments like 1) Generics- APIs
and formulations, 2) specialty pharma - radio pharma, allergy therapy
products and contract manufacturing (CMO) of sterile injectables, 3) drug
discovery and development solutions. EBITDA margins in the
pharmaceutical segment are normally much higher due to presence of
formulations and specialty pharma. The LSI segment consists of subsegments like 1) advanced intermediates and specialty ingredients, 2)
nutrition products and 3) life science chemicals. This segment caters to
more routine customers with committed requirements. Because of the
commodity nature, margins in this segment are relatively low.
Jubilant is one of the few Indian CRAMS players with a vertically
integrated business model. It derives ~50% of sales from CRAMS spread
among various business verticals.
Overall, we expect revenues to grow at a CAGR of 8.4% in FY15-18E to
| 7415.6 crore. The main drivers will be APIs, formulations, specialty
pharma and nutrition products.
Exhibit 1: Revenues to grow at CAGR of 8.4% in FY15-18E
8000

7415.6
6580.9

(| crore)

6000

5803.4

5826.3

5798.7

FY14

FY15

FY16E

5163.7
4303.1

4000

3442.2

2000

0
FY11

FY12

FY13

FY17E

FY18E

Revenues

Source: Company, ICICIdirect.com Research

The pharmaceuticals business has grown at a CAGR of ~15% in FY11-15

driven by generics and specialty pharma. However, pricing pressure in
the drug discovery business and some formulations in the US have put
consistent pressure on the EBITDA margins of the pharma business. In
addition, expenses at the US-based Spoken facility to address the USFDA
warning letter and the subsequent postponement of shipment have led to
a further deterioration in financials. The management expects an
improvement in the margin scenario on the back of the US pipeline (71
filed, 31 launched). We expect the pharma segment to grow at a CAGR of
14.4% to | 4020.7 crore in FY15-18E.

ICICI Securities Ltd | Retail Equity Research

Page 3

Exhibit 2: Pharma segment to grow at CAGR of 14.4% in FY15-18E

5000
4020.7

(| crore)

4000

3496.3

3000

2658.0

2727.8

FY13

FY14

2682.0

3040.2

2175.0
2000
1000
0
FY12

FY15

FY16E

FY17E

FY18E

Pharmaceuticals

Source: Company, ICICIdirect.com Research

Life science ingredients (LSI) cater to more routine customers with

committed requirements. Because of the commodity nature, margins in
this segment are around 15-16%. The business has grown at ~14%
CAGR in FY11-15. Of late, however, this segment is facing issues due to
regulatory changes in China and pricing pressure in some sub-segments.
We expect LSI to grow at 1.8% CAGR in FY15-18E to | 3321.4 crore.
Exhibit 3: LSI segment to grow at CAGR of 1.8% on the back of nutrition products
4000
3076.0

(| crore)

3000

3321.4

3148.2
2745.0

2503.0

3019.5

2103.0
2000

1000

0
FY12

FY13

FY14

FY15

FY16E

FY17E

FY18E

Life Science Ingredients

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 4

Exhibit 4: EBITDA to see improvement

2000
22.4
20.3

1500

1030.5

15
11.8
689.3

554.2

25
20

1007.6

873.5

1000

1743.7
23.5

1298.1

17.4

16.1
(| crore)

20.0

22.6
1490.5

10

500

0
FY11

FY12

FY13

FY14

EBITDA

FY15

FY16E

FY17E

FY18E

EBITDA Margins (%)

Source: Company, ICICIdirect.com Research

Exhibit 5: Improvement in operating margins to improve net profit

1000

877.1

800

658.4

(| crore)

600

494.2

400
229.7

152.7

200

109.0

14.6

-57.8

0
FY11

FY12

FY13

FY14

FY15

FY16E

FY17E

FY18E

-200
Net Profit

Source: Company, ICICIdirect.com Research

Exhibit 6: Trends in return ratios

28
24
20

17.1

16
(%)

12
8
4

15.6
12.5

10.2

15.1
11.5

6.1

17.7
20.4

15.4

5.8
-0.4

0
-4

13.3

12.3
9.7

18.9

FY11

FY12

FY13

-8

FY14
RoCE (%)

FY15

FY16E

FY17E

FY18E

RONW (%)

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 5

Exhibit 7: Trends in quarterly financials

(| crore)
Q1FY14
Net Sales
1318.0
Other Operating Income
41.2
Total Operating Income
1359.3
Raw Material Expenses
581.7
% of revenues
42.8
Gross Profit
777.6
Gross Margins (%)
57.2
Power cost
91.7
% to revenues
6.7
Employee Expenses
256.1
% to revenues
18.8
Selling & Admin expenses
191.9
% to revenues
14.1
Total Expenditure
1121.4
% to revenues
82.5
EBITDA
237.9
EBITDA Margins (%)
17.5
Depreciation
68.2
Interest
80.4
Other Income
6.0
PBT before EO
95.3
Less: Exceptional Items
-111.2
PBT after EO
-15.9
Total Tax
31.4
Tax Rate (%)
-198.2
PAT
-47.3
Minority Interest
5.3
Net Profit
-52.6
EPS (|)
-3.3

Q2FY14
1424.3
11.3
1435.6
570.2
39.7
865.4
60.3
102.5
7.1
284.3
19.8
207.7
14.5
1164.7
81.1
270.9
18.9
71.0
82.1
4.8
122.6
-150.2
-27.7
51.8
-187.3
-79.5
1.1
-80.6
-5.1

Q3FY14
1427.7
15.1
1442.8
595.3
41.3
847.5
58.7
99.1
6.9
281.1
19.5
217.7
15.1
1193.2
82.7
249.6
17.3
73.3
84.6
5.0
96.7
10.5
107.2
-48.8
-45.5
156.0
12.6
143.4
9.0

Q4FY14
1551.6
10.7
1562.3
694.9
44.5
867.4
55.5
96.4
6.2
283.7
18.2
241.5
15.5
1316.5
84.3
245.8
15.7
68.7
75.0
5.0
107.2
36.4
143.6
35.2
24.5
108.4
9.6
98.8
6.2

Q1FY15
1460.5
12.6
1473.1
719.2
48.8
753.9
51.2
98.9
6.7
272.2
18.5
237.2
16.1
1327.6
90.1
145.5
9.9
73.1
77.9
4.2
-1.3
-18.7
-20.0
-29.3
147.0
9.4
4.6
4.8
0.3

Q2FY15
1362.1
9.0
1371.1
606.3
44.2
764.8
55.8
100.1
7.3
271.2
19.8
282.6
20.6
1260.1
91.9
111.0
8.1
69.2
96.0
26.4
-27.8
4.6
-23.1
64.5
-279.1
-87.7
6.5
-94.1
-5.9

Q3FY15
1430.3
15.2
1445.5
622.5
43.1
823.0
56.9
98.9
6.8
271.7
18.8
267.0
18.5
1260.2
87.2
185.3
12.8
79.5
96.1
6.1
15.8
-0.2
15.6
20.2
129.6
-4.6
6.5
-11.2
-0.7

Q4FY15
1523.3
13.3
1536.5
713.7
46.4
822.9
53.6
95.2
6.2
275.1
17.9
205.2
13.4
1289.1
83.9
247.4
16.1
66.2
85.4
5.8
101.7
-33.9
67.8
25.1
37.0
42.7
0.0
42.7
2.7

Q4FY15
1523.3
13.3
1536.5
713.7
46.4
822.9
53.6
95.2
6.2
275.1
17.9
205.2
13.4
1289.1
83.9
247.4
16.1
66.2
85.4
5.8
101.7
-33.9
67.8
25.1
37.0
42.7
0.0
42.7
2.7

Q1FY16
1438.4
20.2
1458.6
545.8
37.4
912.7
62.6
102.1
7.0
274.2
18.8
207.0
14.2
1129.1
77.4
329.4
22.6
70.2
96.4
3.8
166.6
1.9
168.6
25.1
14.9
143.5
0.0
143.5
9.0

Q2FY16
1444.7
18.3
1463.1
530.3
36.2
932.7
63.8
99.3
6.8
285.1
19.5
227.7
15.6
1142.5
78.1
320.6
21.9
75.1
97.4
4.5
152.5
2.3
154.8
25.1
16.2
129.8
0.0
129.8
8.1

Q3FY16
1337.0
42.4
1379.5
481.7
34.9
897.8
65.1
86.6
6.3
283.2
20.5
220.4
16.0
1071.9
77.7
307.5
22.3
74.7
92.5
2.9
143.2
-3.2
140.0
25.1
17.9
114.9
0.0
114.9
7.2

YoY (%) QoQ (%)

-12.2
-7.5
219.1
131.6
-10.2
-5.7
-32.5
-9.2
-1153 bps -133 bps
9.1
-3.7
1153 bps 133 bps
-9.0
-12.8
9 bps -51 bps
2.9
-0.7
263 bps 104 bps
7.4
-3.2
263 bps
41 bps
-16.8
-6.2
-619 bps -38 bps
24.3
-4.1
619 bps
38 bps
12.7
-0.6
8.4
-5.0
-51.1
-36.2
40.9
-6.1
106.5
0.0
-1906.2
168.9
NA
168.9

-9.6
0.0
172
-11.5
NA
-11.5

Source: Company, ICICIdirect.com Research

SWOT Analysis
Strengths - Vertically integrated model. Proven capabilities in the CRAMS
space
Weakness - Too many revenue heads, struggling to cope up with margin
pressure and above all a huge debt burden. Commoditised nature of the
LSI segment
Opportunities - The US generics space. Incremental CRAMS orders
Threats - Leverage ratios are at alarming levels. Already under the USFDA
scanner. The LSI business is witnessing headwinds in China

ICICI Securities Ltd | Retail Equity Research

Page 6

Conference call highlights

ICICI Securities Ltd | Retail Equity Research

The company has filed 71 ANDAs in the US till date of which 27

are pending approvals. It received four ANDA approvals for
Indomethacin ER capsules (anti-inflammatory), Rizatriptan
Benzoate orally disintegrating tablets (CNS), Paroxetine Tablets
(CNS) and Citalopram Hydrobromide tablets (anti-depressant) and
tentative approval for Olmesartan Medoxomil (CVS)
Total ~25% of these 71 ANDAs are vertically integrated
It has commercialized 51 solid dosage formulations products,
including 31 in the US, 29 in Europe and 27 in ROW markets in
Q3FY16. It launched Irbesartan tablets (hypertension) &
Montelukast chewable tablet (CVS) in the US, Losartan
(hypertension) in Taiwan and Esomeprazole (GI) in UAE
It has commercialised 38 APIs till date; 24 in the US, 23 in Europe
and 28 in ROW markets
The company witnessed a strong order book in the CMO business
and expects a good ramp up of operations in coming quarters.
Currently, JLS is at break-even levels in this segment
The company expects the CMO business to scale historical peak
sales in the next couple of years
The company witnessed pricing pressure in some key products in
the US market due to supply chain consolidation, which led to
muted growth in the generics business
The Ministry of Commerce People's Republic of China (MOFCOM)
has reviewed the anti dumping duty on Pyridine to 17.6% from
24.6%. Demand in China continues to remain uncertain due to
ban on Paraquat
All pharmaceutical facilities were inspected successfully by the
USFDA during the year. During the quarter, USFDA successfully
inspected
API
facility
in
Nanjangud,
CMO
and
radiopharmaceuticals facilities in Montreal
The company expects Rubifill 505(2b) approval to be received by
Q1FY17 from Montreal facility
The company has signed new contracts across applications in
nutritional products and also in life science chemicals
Net debt as of 9MFY16 is | 4173 crore of which | 1085 crore is
accounted as working capital debt.

Page 7

Valuation
Q3 revenues were mainly impacted by a decline in the LSI segment
caused by lower crude prices. Despite a marked improvement in the
margin scenario in 9MFY16, revenues remained flat YoY on account of
~12% decline in the LSI segment, which overshadowed 15% pharma
growth. The pharmaceutical business growth is likely to sustain on the
back of robust US sales and other sub-segments but LSI segment growth
prospects remain hazy due to lower oil prices and regulatory changes.
With only one engine working in full throttle, the legacy debt issue is likely
to weigh on investors sentiments in the near term. Note that leverage
issues have improved only marginally and there remains a long journey
ahead. We Have ascribed a target price of | 375 based on 5x (6x earlier)
FY18 EV/EBITDA.
Exhibit 8: One year forward PE
600
500

(|)

400
300
200
100

Price

13.1x

11.4x

8.7x

6.1x

Jul-15

Dec-14

May-14

Oct-13

Mar-13

Aug-12

Jan-12

Jun-11

Nov-10

Apr-10

Sep-09

Feb-09

Jul-08

Dec-07

May-07

Oct-06

Mar-06

1.6x

Source: Company, ICICIdirect.com Research

Exhibit 9: One year forward PE of company vs. CNX Pharma

40
35
30

(x)

25
20
15
10
5

Jubilant

Sep-15

Mar-15

Sep-14

Mar-14

Sep-13

Mar-13

Sep-12

Mar-12

Sep-11

Mar-11

Sep-10

Mar-10

Sep-09

Mar-09

Sep-08

Mar-08

Sep-07

Mar-07

Sep-06

Mar-06

CNX Pharma

Source: Company, ICICIdirect.com Research

Exhibit 10: Valuation

FY15
FY16E
FY17E
FY18E

Revenues
(| crore)
5826
5799
6581
7416

Growth
(%)
0.4
-0.5
13.5
12.7

Adj. EPS
(|)
-0.6
31.0
41.3
55.1

Growth
(%)
PL
LP
33
33

P/E EV/EBITDA
(x)
(X)
NA
14.3
11.0
7.3
8.3
5.9
6.2
4.7

RoNW
(%)
-0.4
17.1
18.9
20.4

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 8

RoCE
(%)
5.8
13.3
15.4
17.7

Company snapshot
Target Price:375

500
450
400
350
300
250
200
150
100
50

Jan-17

Oct-16

Jul-16

Apr-16

Jan-16

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date
May-11

Event
Repays FCCB debt worth US$202 million including yield to maturity of US$60 million

Feb-13

Receives warning letter from USFDA for its Montreal facility

Jul-13

China imposes anti dumping duty margin of 24.6% to 57.4% for Pyridine imported from India

Dec-13

USFDA issues warning letter for Spokane facility

Feb-14

Jubilant receives establishment inspection report from USFDA for its Montreal facility

Mar-14

Sells hospitals business to Narayana Health for | 45 crore

May-14

IFC grants loan of US$200 million to companys wholly-owned subsidiary Jubilant Pharma

Jun-15

US based Spokane facility (CMO) receives USFDA clearance

Source: Company, ICICIdirect.com Research

Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10

Shareholding Pattern

Name
Jubilant Stock Holding Pvt. Ltd.
Jubilant Capital Pvt. Ltd.
Jubilant Securities Pvt. Ltd.
Samena Capital Management LLP
East Bridge Capital Management L.P.
Vam Holdings, Ltd.
Norges Bank Investment Management (NBIM)
Jubilant Employees Welfare Trust
Nikita Resources Pvt. Ltd.
Rance Investment Holdings, Ltd.

Latest Filing date

30-Sep-15
30-Sep-15
30-Sep-15
30-Sep-15
30-Sep-15
30-Sep-15
30-Sep-15
22-Jan-16
30-Sep-15
30-Sep-15

% O/S Position (m) Change (m)

18.6
29.7m
0.0m
13.2
21.0m
0.0m
11.7
18.7m
0.0m
4.4
7.0m
-0.6m
3.8
6.0m
0.0m
3.6
5.7m
0.0m
2.5
4.0m
-0.1m
2.5
4.0m
0.0m
2.2
3.5m
0.0m
1.5
2.4m
0.0m

(in %)
Promoter
FII
DII
Others

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

54.0
54.0
54.0
54.0
54.0
22.6
21.8
16.9
17.6
26.2
0.8
0.7
0.8
0.6
2.7
22.2
23.5
28.3
27.9
17.1

Source: Reuters, ICICIdirect.com Research

Recent Activity
Buys
Investor name
Acadian Asset Management LLC
Russell Investments Limited
Kulshrestha (Vimaldeep)
Allianz Global Investors U.S. LLC
Sharma (Arun Kumar)

Value ($)
0.3m
0.2m
0.1m
0.1m
0.1m

Shares
0.0m
0.0m
0.0m
0.0m
0.0m

Sells
Investor name
Bhartia (Shyam Sunder)
Gothic Corporation
Samena Capital Management LLP
Atyant Capital Partners
DSP BlackRock Investment Managers Pvt. Ltd.

Value ($)
-8.5m
-3.8m
-3.4m
-2.3m
-2.5m

Shares
-1.4m
-0.7m
-0.6m
-0.4m
-0.4m

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 9

Financial summary
Profit and loss statement
(Year-end March)
Revenues
Growth (%)
Raw Material Expenses
Employee Expenses
Selling & Admin expenses
Power cost
Total Operating Expenditure
EBITDA
Growth (%)
Depreciation
Interest
Other Income
PBT before EO
Less: Exceptional Items
Total Tax
Minority Interest
PAT
Growth (%)
EPS
Adjusted PAT
EPS (Adjusted)

| Crore
FY15
5,826.3
0.4
2,661.7
1,090.3
992.0
393.0
5,137.0
689.3
-31.6
288.0
355.3
42.5
88.4
48.1
80.5
17.6
-57.8
PL
-3.6
-9.7
-0.6

FY16E
5,798.7
-0.5
2,096.9
1,127.1
894.3
382.1
4,500.5
1,298.1
88.3
295.6
378.9
14.3
637.9
-1.0
144.7
0.0
494.2
LP
31.0
493.2
31.0

FY17E
6,580.9
13.5
2,364.5
1,283.3
992.3
450.3
5,090.4
1,490.5
14.8
313.4
327.0
16.3
866.3
0.0
207.9
0.0
658.4
33.2
41.3
658.4
41.3

FY18E
7,415.6
12.7
2,664.4
1,446.0
1,054.0
507.4
5,671.9
1,743.7
17.0
324.2
283.9
18.4
1,154.0
0.0
277.0
0.0
877.1
33.2
55.1
877.1
55.1

Source: Company, ICICIdirect.com Research

| Crore
FY15
15.9
2,437.6
2,453.5
4,791.8
238.0
0.0
106.8
7,590.2
4,917.7
1,930.2
2,987.5
198.2
3,185.7
2,322.2
39.5
1,235.3
816.4
214.3
394.3
67.5
2,727.9
699.2
97.5
245.3
1,042.0
1,685.9
0.0
356.9
7,590.2

| Crore

(Year-end March)
Profit/(Loss) after taxation
Add: Depreciation
(Inc)/dec in Current Assets
Inc/(dec) in CL and Provisions
CF from operating activities
(Purchase)/Sale of FA
Deferred Tax Liability
Minority Interest
Investments
Other Investing Activities
CF from investing activities
Inc/(Dec) in Equity Capital
Proceeds/(Repayment) of/from Lo
Dividend & Dividend tax
Others
CF from financing activities

FY15
-57.8
288.0
114.9
-172.0
173.1
-155.7
1.0
-157.9
-5.5
-183.1
-501.3
0.5
397.8
-57.5
(97.7)
243.1

FY16E
494.2
295.6
-0.4
-32.2
757.3
-350.0
0.0
0.0
0.0
80.0
-270.0
0.0
-500.0
-64.1
-564.1

FY17E
658.4
313.4
-349.3
202.4
825.0
-225.0
0.0
0.0
0.0
30.0
-195.0
0.0
-500.0
-59.3
-559.3

FY18E
877.1
324.2
-382.6
204.1
1,022.7
-225.0
0.0
0.0
0.0
-70.0
-295.0
0.0
-500.0
-61.4
-561.4

Net Cash flow

Opening Cash
Closing Cash
Free Cash Flow

-85.1
479.5
394.3
17.4

-76.8
394.3
317.5
407.3

70.7
317.5
388.2
600.0

166.3
388.2
554.5
797.7

FY15

FY16E

FY17E

FY18E

-3.6
-0.6
14.5
154.0
3.6
24.8

31.0
31.0
49.6
181.0
4.0
19.9

41.3
41.3
61.0
218.6
3.7
24.4

55.1
55.1
75.4
269.8
3.9
34.8

54.3
11.8
-0.2
77.4
51.1
43.8
25.1

63.8
22.4
8.5
76.8
50.7
43.5
58.3

64.1
22.6
10.0
77.3
51.0
43.8
55.3

64.1
23.5
11.8
79.2
53.5
43.8
58.6

-0.4
5.8
5.6

17.1
13.3
13.7

18.9
15.4
15.9

20.4
17.7
18.7

NA
14.3
1.7
0.9
2.2

11.0
7.3
1.6
0.9
1.9

8.3
5.9
1.3
0.8
1.6

6.2
4.7
1.1
0.7
1.3

2.0
7.0
2.2

1.5
3.3
2.3

1.1
2.5
2.2

0.8
1.9
2.2

Source: Company, ICICIdirect.com Research

Balance sheet
(Year-end March)
Equity Capital
Reserve and Surplus
Total Shareholders funds
Total Debt
Deferred Tax Liability
Minority Interest
Other Non CL & LT Provisions
Total Liabilities
Gross Block - Fixed Assets
Accumulated Depreciation
Net Block
Capital WIP
Total Fixed Assets
Total Intangible Assets
Investments
Inventory
Debtors
Loans and Advances
Cash
Other current Assets
Total Current Assets
Creditors
Provisions
Other Current Liabilities
Total Current Liabilities
Net Current Assets
Deferred Tax Assets
LT L & A, Other Non CA
Application of Funds

Cash flow statement

FY16E
15.9
2,867.7
2,883.6
4,291.8
238.0
0.0
206.8
7,620.3
5,217.7
2,128.9
3,088.8
198.2
3,287.0
2,275.3
39.5
1,219.7
804.7
227.1
317.5
82.5
2,651.5
690.6
97.5
221.7
1,009.8
1,641.7
0.0
376.9
7,620.3

FY17E
15.9
3,466.8
3,482.8
3,791.8
238.0
0.0
256.8
7,769.5
5,392.7
2,339.3
3,053.5
198.2
3,251.6
2,222.2
39.5
1,393.5
919.3
272.9
388.2
97.5
3,071.5
789.0
97.5
325.7
1,212.3
1,859.3
0.0
396.9
7,769.5

Source: Company, ICICIdirect.com Research

FY18E
15.9
4,282.5
4,298.4
3,291.8
238.0
0.0
306.8
8,135.1
5,567.7
2,556.4
3,011.3
198.2
3,209.5
2,165.2
39.5
1,609.2
1,086.2
272.9
554.5
97.5
3,620.5
889.1
97.5
429.7
1,416.3
2,204.1
0.0
516.9
8,135.1

Key ratios
(Year-end March)
Per share data (|)
Reported EPS
Adjusted EPS
Cash EPS
BV per share
Dividend per share
Cash Per Share
Operating Ratios (%)
Gross Profit Margins
EBITDA Margins
PAT Margins
Inventory days
Debtor days
Creditor days
EBITDA conversion Rate
Return Ratios (%)
RoE
RoCE
RoIC
Valuation Ratios (x)
P/E
EV / EBITDA
EV / Net Sales
Market Cap / Sales
Price to Book Value
Solvency Ratios
Debt / Equity
Debt / EBITDA
Current Ratio

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 10

ICICIdirect.com coverage universe (Healthcare)

Company

I-Direct
Code

CMP TP
(|)
(|)

Rating M Cap
(| Cr)

FY15

EPS (|)
FY16E FY17E FY15

PE(x)
EV/EBITDA (x)
RoCE (%)
RoE (%)
FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E

Ajanta Pharma

AJAPHA

1301 1,780 Buy

11448.5

36.0

44.1

49.3

36.1

29.5

26.4

22.6

19.4

17.0

50.3

45.5

40.2

37.8

33.8

Apollo Hospitals

APOHOS

1434 1,340 Hold

19956.1

23.7

28.8

34.1

60.4

49.9

42.0

29.6

25.0

20.5

9.9

11.5

12.9

10.4

11.5

12.3

Aurobindo Pharma

AURPHA

743

990 Buy

43469.6

28.1

32.5

37.5

26.5

22.8

19.8

30.7

25.7

21.9

23.4

25.3

26.6

31.7

27.9

24.8

Alembic Pharma

ALEMPHA 590.5

790 Buy

11130.9

15.1

39.0

28.5

39.1

15.2

20.7

32.2

12.8

17.5

30.7

56.7

33.0

32.1

52.2

30.1

Biocon

BIOCON

458

510 Hold

9159.0

20.4

23.5

26.3

22.4

19.5

17.4

7.6

6.7

5.7

10.4

11.7

13.1

12.5

12.6

12.8

Cadila Healthcare
Cipla

CADHEA
CIPLA

328.1
557

405 Buy
750 Buy

33583.9
44704.9

11.2
14.7

14.3
22.3

15.3
28.2

29.3
37.8

22.9
25.0

21.4
19.7

20.3
24.5

15.3
18.2

14.6
14.7

20.7
13.8

25.8
15.9

24.6
18.1

27.0
10.9

27.4
14.6

24.1
16.0

Divi's Laboratories

DIVLAB

1037 1,320 Buy

27522.5

32.1

40.2

46.7

32.3

25.8

22.2

23.6

19.9

16.8

29.4

31.3

31.1

24.4

25.6

25.1

Dr Reddy's Labs

DRREDD

2960 3,880 Buy

50493.9 129.0 142.2 142.1

22.9

20.8

20.8

14.4

12.0

11.6

16.7

17.4

16.5

22.3

19.8

16.5

Glenmark Pharma

GLEPHA

735 1,140 Buy

20738.6

31.8

21.6

16.4

24.0

17.3

13.7

13.3

20.2

23.4

21.7

25.7

25.6

Indoco Remedies

INDREM

Ipca Laboratories

IPCLAB

23.1

34.1

44.7

29.0

301

389 Buy

2775.1

9.0

9.6

15.4

33.5

31.4

19.6

18.3

16.8

12.5

16.4

15.9

22.0

16.0

15.1

20.5

654.1

735 Buy

8254.7

19.9

12.0

30.3

32.8

54.7

21.6

17.0

23.3

13.5

11.5

6.6

13.9

11.4

6.6

14.6

355

375 Hold

5659.1

-0.6

31.0

41.3

NA

11.5

8.6

14.3

7.3

5.9

5.8

13.3

15.4

NA

17.1

18.9

1904 2,200 Buy

85781.6

53.6

45.0

67.3

35.5

42.3

28.3

21.6

25.6

16.6

35.1

20.4

28.1

27.1

19.2

23.2

58.7

41.5

51.8

41.7

33.4

15.4

13.4

15.8

17.9

10.5

13.2

Jubilant Life Sciences

VAMORG

Lupin

LUPIN

Natco Pharma

NATPHA

462

630 Buy

8054.7

8.3

7.9

11.1

55.6

Sun Pharma

SUNPHA

854.3

825 Hold

205589.5

19.8

19.3

25.8

43.1

44.2

33.1

23.6

23.1

17.8

18.8

18.0

20.8

18.6

15.9

18.1

Torrent Pharma

TORPHA

1327 1,650 Buy

22453.8

44.4 112.3

66.8

29.9

11.8

19.9

24.2

8.5

13.3

20.1

42.8

24.4

30.2

49.4

24.1

Unichem Laboratories

UNILAB

212.3

15.7

25.6

19.3

13.5

20.9

13.6

10.6

8.5

13.1

16.6

8.7

10.6

13.7

310 Buy

1928.6

8.3

11.0

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 11

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 12

ANALYST CERTIFICATION
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this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific
recommendation(s) or view(s) in this report.

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ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in
respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.
ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in
the report in the past twelve months.
ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or
other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material
conflict of interest at the time of publication of this report.
It is confirmed that Siddhant Khandekar, CA INTER and Mitesh Shah, MS (finance), Nandan Kamat MBA, Research Analysts of this report have not received any compensation from the companies mentioned
in the report in the preceding twelve months.
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the
publication of the research report.
Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject
company/companies mentioned in this report.
It is confirmed that Siddhant Khandekar, CA INTER and Mitesh Shah, MS (finance), Nandan Kamat MBA, Research Analysts do not serve as an officer, director or employee of the companies mentioned in the
report.
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.
We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,
publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities
described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to
observe such restriction.

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