Jubilant Life Sciences: Multiple triggers in place to drive earnings

Jubilant Life Sciences

BSE Sensex

31,210

S&P CNX

9,613

Initiating CoverageJubilant Life Sciences

| Sector: Healthcare

CMP: INR692

TP: INR905 (+31% )

Buy

Promising formulation

Multiple triggers in place to drive earnings

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

M.Cap. (INR b)

M.Cap. (USD b)

Avg Val, INRm

Free float (%)

JOL IN

159.3

879 / 298

-6/-20/104

110.2

1.71

667

46.0

Financial Snapshot (INR b)

Y/E MARCH

FY17 FY18E FY19E

Net Sales

60.1 65.9 72.9

EBITDA

13.5 15.7 17.7

5.8

7.4

8.8

EPS (INR)

37.0 47.3 56.7

EPS Gr.%km

37.5 28.0 19.8

BV/Share

220.7 263.3 314.4

P/E (x)

18.7 14.6 12.2

P/BV (x)

3.1

2.6

2.2

RoE (x)

18.1 19.6 19.6

RoCE (x)

11.0 12.0 13.0

Shareholding pattern (%)

As On

Mar-17 Dec-16 Mar-16

Promoter

54.0

DII

3.7

3.1

0.1

FII

22.9

25.7

29.9

Others

19.3

17.2

16.0

FII Includes depository receipts

Jubilant Life Sciences

Promising formulation

tushar.manudhane@motilaloswal.com

Please click here for Video Link

Tushar Manudhane

91 22 3010 2498

Jubilant Life Sciences (JLS), part of Jubilant Bhartia Group, is an integrated

pharmaceuticals and life sciences company engaged in the manufacture of

radiopharmaceuticals, allergy products, generics, advance intermediates,

nutritional products and life science chemicals. JLS also provides services

in contract manufacturing and drug discovery solutions. JLS’ operations

are spread across the world, including India, the US, Canada, Europe and

other countries.

All sub-segments in pharmaceuticals (52% of total sales) are well poised

for growth, in our view. Compared to peers, JLS has a unique portfolio of

specialty pharmaceuticals, which includes radiopharmaceuticals, allergy

products and CMO. We expect the company’s differentiated products &

distribution strategy and long-term contracts to lead to 18% CAGR (FY17-

20) in radiopharmaceuticals sales, while enhanced marketing efforts to

improve productivity should lead to 20% CAGR (over FY17-20) in allergy

products sales. High entry barriers for developing and manufacturing are

expected to further improve profitability.

JLS is also expected to perform well in the life science ingredients (LSI)

segment (45% of total sales), driven by product launches and price hikes in

key products. Post 4.2% compounded decline in revenues over FY14-17

due to product-specific issues, LSI is expected to post revenue CAGR (FY17-

20) of 10.2% to INR36.2b.

JLS has successfully cleared US FDA inspections at its various facilities in

the past three years. Notably, it resolved warning letters at Spokane and

Montreal within 12-15 months. While peers are faced with numerous

regulatory headwinds, we believe JLS has minimal regulatory risks over the

medium term.

The company’s debt-reduction program (from internal accruals) remains

on track. This is expected to reduce financial leverage from 1.1x in FY17 to

0.4x in FY20. This, along with lower-cost debt, is expected to improve the

interest coverage ratio from 3.1x in FY17 to 6.6x by FY20. Overall, for JLS,

we expect PAT CAGR (FY17-20) of 22.9%.

We value JLS on an SOTP basis, assigning 11x EV/EBITDA to the pharma

business and 4.5x EV/EBITDA to the LSI business. We value the pharma

business at industry average, as the share of high-margin segments is

increasing in the pharma portfolio. Accordingly, we initiate coverage on

JLS with a Buy rating and a price target of INR905.

4 July 2017

Jubilant Life Sciences

Stock Performance (1-year)

Pharmaceuticals – the key growth driver

LSI segment to support overall growth in medium term

JLS has a segment-specific strategy in place to deliver a better performance in

pharmaceuticals.

With long-term contracts in place for the radiopharma portfolio, the company’s

owned distribution network (via the acquisition of Triad), along with ongoing

efforts toward commercializing RUBY-FILL and selling via its own distribution

network, is expected to significantly boost its radiopharma revenues over the

next 4-5 years.

Increased marketing effort in the allergy business and better visibility for the

CMO business with improved margins would drive growth in specialty

pharmaceuticals.

De-bottlenecking, cost efficiency and a healthy product pipeline are expected to

facilitate healthy growth in API and formulations business of pharma generics.

JLS has lined up seven new product launches in FY18 to aid growth in specialty

intermediates. There has been capacity expansion as well, led by retrofitting.

Although capacity has been fully utilized for nutritional products, JLS is likely to

drive growth via price hikes over the medium term.

JLS has reduced net debt by INR8.7b over the past two years, and guided for

further payment of ~INR3b on annualized basis over the next two years.

It is also trying to convert high-cost debt to low-cost one. As a result, JLS has

been able to not only reduce interest cost, but also improve profitability.

JLS successfully resolved warning letters at its Spokane and Montreal facilities in

2014 and 2015, respectively. Since then, it is FDA-compliant at all other facilities.

Most of the facilities have been re-inspected successfully in the past six months.

JLS has exhibited considerable improvement in its financial performance, led by

margin improvement over the past two years. In addition, based on

management outlook, there are enough levers in place to gain further traction

in earnings via revenue and margins improvement.

We expect revenue CAGR of 11% to reach INR82b in FY20. We also expect

EBITDA CAGR of 14.4%, led by improved efficiency. Further reduction in interest

outgo, coupled with EBITDA growth, is expected to lead to PAT CAGR of 22.9%

to INR10.6b by FY20.

We value the pharma business at 11x 12M forward EBITDA, which is industry

average multiple, to arrive at pharma EV of INR151b. We value the LSI business

at 4.5x 12M forward EBITDA to arrive at LSI EV of INR25.7b. Reducing the net

debt, we arrive at an SOTP-based valuation of INR141b. We thus initiate

coverage on JLS with a

Buy

rating and a target price of INR905.

A miss on execution expectations would result in lower growth in revenues from

radiopharma and allergy products.

Lower-than-expected acceptance of innovative radiopharma products may

impact revenue and profit growth.

Delay in ANDA approvals in the US market may result in loss of opportunity and

thus reduce profitability of formulation generics.

Ongoing debt-reduction program to enhance profitability

Inspection performance has been good over past three years

Valuation

Risks

4 July 2017

Jubilant Life Sciences

Current business description in charts

Exhibit 1: Pharmaceuticals contribute 52% of total revenues for FY17…

Source: MOSL, Company

4 July 2017

Jubilant Life Sciences

Story in charts (till FY17)

Exhibit 2: Revenue CAGR has been moderate…

Total Revenue (INR b)

62.6

Exhibit 3: …however, margin has been on uptrend

EBITDA Margin (%)

60.1

57.9

54.3

Gross Margin (%)

63.5

66.7

43.0

51.7

58.0

58.3

58.0

60.1

20.4

17.4

22.0

11.8

22.4

Source: MOSL Company

Exhibit 4: R&D spend has been rising for future growth

R&D Expenditure (INR bn)

R&D as % of pharma sales

8.3

5.5

5.9

6.4

5.0

6.0

2.6

1.0

1.4

1.6

1.3

1.8

Exhibit 5: Interest coverage ratio improving

3.1

2.7

2.2

Interest Coverage Ratio

2.5

3.1

1.1

Source: MOSL Company

Exhibit 6: Margin expansion aids PAT growth…

PAT (INR bn)

Exhibit 7: … and return ratios as well

ROE

10.9

9.9

9.5

-4.2

-6.2

11.0

ROCE

15.6

5.8

7.0

4.4

7.2

18.1

1.5

2.6

2.5

-1.1

4.2

7.2

Source: MOSL Company

4 July 2017

Jubilant Life Sciences

Investment Argument 1:

Pharmaceuticals to fire on all cylinders

JLS has multiple levers in place in the major sub-segments of pharmaceuticals, which

should drive better growth, going forward. Actions taken by management are

already reflected to some extent in growth over the last two years.

Exhibit 9: Superior execution and capacity enhancement to

drive growth

27.0

3.7

Pharma INR bn

14.4

1.3

29.3

6.5

Yoy Growth (%)

Exhibit 8: Revenue composition of Pharma (FY17)

0.6%

7.8%

26.2%

26.1%

19.1%

20.2%

API

SDF

CMO

Radiopharma

Allergy Therapy

Indian Branded

Source: MOSL, Company

10.2 12.5 14.5

44.3

34.4 38.6

24.4

25.3

25.6

31.2

Source: MOSL, Company

JLS exhibited muted revenue growth in FY14 and FY15 due to segment-specific

issues. However, we note that these issues are not only largely resolved, but JLS has

added enough triggers of growth for the next 2-3 years.

4 July 2017

Jubilant Life Sciences

Exhibit 10: Added high-margin businesses via inorganic route

Completed the acquisition of

minority holding in Cadista;

$147m funding from IFC &

consolidated entire pharma

business Under Jubilant

Pharmaceutical

Commissioned

Sartans plant to

strengthen position

in API

Commissioned solid

dosage oral facility in

Roorkee

Acquired Draxis

(A Canadian CMO

service provider)

Acquired Hollister

Stier Lab in US

(A CMO service

provider)

Acquired Cadista

(generic

pharmaceutical

company in the US)

Acquired API

business -

Nanjungud

Source: MOSL, Company

4 July 2017

Jubilant Life Sciences

Within the pharmaceuticals business, specialty pharma is expected to lead growth

over the medium term. All the three sub-segments in specialty pharma are expected

to have better traction due to:

Commercial launch of NDA (RUBY-FILL) and acquisition of a distribution chain to

increase penetration in radiopharma.

Health order book and ramp-up of operations in CMO of sterile injectables.

Increased field force to enhance reach in allergy products.

Also, the other segment within pharmaceuticals – generics – is expected to show

revival in growth, led by:

Brownfield expansion and considerable capex lined up for future growth in API.

New product launches and increased traction in existing products, which should

drive growth in solid dosage formulation.

After growing sharply in FY17, the drug discovery solutions business is expected to

maintain its annual run-rate, led by out-licensing income and addition of new

customers. Each segment is explained in detail in the coming sections.

4 July 2017

Jubilant Life Sciences

1.1

Radiopharma: A promising space to watch for

Recent NDA approval and

subsequent

commercialization to boost

sales and profitability

Via the acquisition of Draxis in 2008, JLS entered into the business of developing,

manufacturing and commercializing radiopharmaceuticals used for diagnosis,

treatment and monitoring of diseases.

Exhibit 11: Innovative products and differentiated strategy to drive growth over 4-5 years

Radiopharma,

26.2%

Radiopharma (INR bn)

117.3

Yoy growth (%)

25.9

15.6

35.9

14.5

16.0

18.0

11.2

20.0

2.1

2.4

5.2

7.1

8.2

9.5

13.4

Source: MOSL, Company

Note: Radiopharma sales as a % of

pharmaceuticals sales in FY17.

Source: MOSL, Company

JLS currently supplies products to specialized radiopharmacies. Over the past five

years, this business has exhibited CAGR of 38% to reach INR8.2b. Notably, JLS is the

leader in North America for thyroid radiotherapy, lung, kidney and bone imaging. It

has facility in Montreal, Canada, where ~150 skilled employees are involved in the

manufacture of radiopharmaceutical products.

Warning letter issued by USFDA was closed out at Montreal in September 2014. Post

that, there has been renewed strategic focus based on value-based approach on

business which led to strong growth in revenues in FY15 and FY16. In addition, the

company adopted customer-specific targeting for radio-iodine therapy, which led to

further growth in this business.

Long-term contracts for radiopharma products provides good visibility of

business over medium term

JLS has signed long-term contracts with other distribution networks in the US for the

supply of radiopharma products for period of 39 months, effective January 2017.

Acquisition of Triad to provide own distribution network

JLS recently signed an asset purchase agreement with Triad Isotopes to acquire

substantially all of the assets that comprise the radio pharmacy business of the

latter. Triad has the second largest radio pharmacy network in the US. It had

generated revenue of USD225m with positive EBITDA in CY16. JLS would be able to

increase the reach of its radiopharma products through the Triad network, which

would aid growth in revenue and profitability.

In addition, JLS would also be approaching hospital based customers (nuclear

medicine physicians and technologists) through own distribution network. This

would also drive growth in radiopharmaceutical segment to considerable extent.

4 July 2017

Jubilant Life Sciences

Exhibit 12: Product profile (Diagnostic and Therapeutic)

Source: MOSL, Company

RUBY-FILL – another growth enabler in radiopharma

In October 2016, JLS received US FDA approval for RUBY-FILL, an innovative

technology for Positron Emission Technology (PET) myocardial perfusion imaging

(MPI).

About RUBY-FILL:

Comprised of Rubidium-82 generator and precedent setting

elution system, RUBY-FILL is used to produce a personalized patient dose of

Rubidium Rb 82 chloride used to evaluate regional myocardial perfusion in adult

patients with suspected or existing coronary artery disease (CAD), which is an

important component of diagnosing CAD.

Industry overview

The different methods of scanning include x-ray computed tomography (CT),

magnetic resonance imaging (MRI), functional magnetic resonance imaging (fMRI),

ultrasound, single-photon emission computed tomography (SPECT) and positron

emission tomography (PET). While scans such as CT and MRI isolate organic

anatomic changes in the body, PET and SPECT are capable of detecting areas of

molecular biology detail (even prior to anatomic change). The market size for PET

and SPECT was about

USD1.4b at the end of 2016.

About 95% of market in terms of

procedures for molecular biology detailing is dominated by SPECT. This is primarily

due to low cost of SPECT scans as they are able to use-longer lived more easily

obtained radioisotopes than PET.

4 July 2017

Jubilant Life Sciences

Exhibit 13: US diagnostic radiopharmaceuticals market size

PET ($bn)

SPECT ($bn)

1.4

0.5

0.9

1.4

0.5

0.9

1.5

0.6

0.9

1.8

0.7

1.1

1.9

0.7

1.2

2.0

0.7

1.3

2.1

0.7

1.4

Source: MOSL Company, Industry

Of the total US diagnostic radiopharma market, nuclear cardiology diagnostic PET

procedures

(market size of USD65m)

are largely performed by JLS’ competitor.

Advantage RUBY-FILL

Using RUBY-FILL, JLS has strategized to enter the PET category via marketing of new

products and technology, which the company claims to be superior to the existing

one. Also, the quality of imaging is expected to be much better.

In addition, JLS has a different strategy in place for RUBY-FILL in terms of selling the

product. JLS would be doing direct marketing (to hospitals/radio pharmacies) with

its own field force. Thus, JLS would not be involving distributors for this product.

Thus, superior technology and own distribution would help enhance sales and

profitability.

Product filings

JLS has product approvals in Canada, Europe and ROW. JLS continues to expand its

reach, gaining better traction from the launched products in these markets.

JLS has about 10 products under development, of which two are under review by

the US FDA. JLS has guided to file two products in FY18 and remaining over the next

three years.

Another NDA – I-131 MIBG

Specifically, JLS has received orphan drug status, with eligibility for accelerated

approval, no regulatory filing fees and seven years’ exclusivity for I-131 MIBG.

Enrolment for the phase-II trial is expected to start by 3QFY18, and there is a good

scope for fast-track approval post the trial.

Thus, based on its existing products, superior growth in RUBY-FILL, increased

advantage due to the acquisition of distribution network and healthy product

pipeline, as well as considering the management guidance, we expect the

radiopharma business to grow at 18% CAGR (FY17-20) to INR13.5b.

4 July 2017

Jubilant Life Sciences

1.2

Allergy business: Ample scope and renewed focus to

drive business

Another leg of growth in

specialty pharma

JLS entered the allergy business via the acquisition of HollisterStier in 2007, and is

now the leading immunotherapy player in the US market with strong presence

across product segments. JLS’s allergic business encompasses over 200 allergenic

extracts and mixes, along with specialized skin test diagnostic devices.

Exhibit 14: Higher prescription through increased reach and productivity to drive growth

Allergy

Therapy,

7.8%

Allergy Therapy Products (INR bn)

21.7

8.6

3.7

1.8

2.3

1.9

2.0

2.4

20.0

Yoy Growth (%)

18.0

20.0

22.0

2.9

3.5

4.2

Source: MOSL, Company

Note: Allergy Therapy sales as a % of

pharmaceuticals sales in FY17.

Source: MOSL, Company

Growth was muted in FY14 due to a weak performance in diluent products – a sub-

segment of allergy products. There was recall and re-introduction of diluent

products, which impacted overall growth of the allergy segment. There was six-week

shutdown at the beginning of FY15, which coupled with the exercise to improve

efficiencies, led to subdued growth in FY15 as well. However, there has been strong

uptrend in growth since FY16 due to increased prescription, led by better sales

reach and increased field force.

Our channel checks suggest that JLS is the third largest player in the allergy business,

with ~15% market share (note that there is significant gap between JLS and the

second largest player). To gain further traction in this business, the company is now

focusing on improving field force productivity. JLS is also in the process of increasing

penetration in the geographies outside of the US (e.g. Canada, New Zealand, France,

South Korea and Australia). In this segment, JLS also focuses on patient education,

availability of physician resources and allergy consulting. Considering this, we expect

the allergy therapy business to record a CAGR (FY17-20) of 20% to INR4.2b.

4 July 2017

Jubilant Life Sciences

1.3

CMO: Healthy orderbook and client addition are key

JLS entered the CMO business in 2007 via the acquisition of HollisterStier. The

company provides sterile manufacturing services for phase-I through commercial

liquid and lyophilized products in vials and ampoules, as well as ophthalmic and

optic solutions. JLS also offers non-sterile manufacturing services for ointment,

cream and liquid products.

Exhibit 15: Manufacturing facilities for CMO business

Facility

Spokane, USA

Montreal, Canada

Description

Phase 1 commercial sterile injectable and lyophilisation (vials), laboratory

services

Commercial sterile injectable (vials and ampoules), lyophilization, sterile

ophthalmics and optics (tubes and bottles), non-sterile topical and liquids

(tubes, bottles, jars, applicators), laboratory services

Source: MOSL, Company

Time for growth after

improving profitability in

FY16 & FY17

As shown in exhibit 6, growth in the CMO business was adversely impacted in FY14

and FY15 due to warning letter by the US FDA for its Spokane facility in December

2013 and voluntary shutdown of facility for period of four months. As a result, the

company’s CMO sales declined from INR7.1b in FY13 to INR4.5b in FY15.

Exhibit 16: After focusing on profits for past two years, it’s time to focus on growth

CMO,

19.1%

14.3

(2.0)

CMO sales (INR bn)

27.3

4.5

(35.7)

Yoy Growth (%)

11.0

11.5

12.0

7.1

7.0

4.5

5.7

6.0

6.6

7.4

8.2

Source: MOSL, Company

Note: CMO sales as a % of

pharmaceuticals sales in FY17.

Source: MOSL, Company

However, JLS implemented remediation measures and resolved the regulatory

issues, which resulted in up-gradation of the facility to Voluntary Action Initiated

(VAI) status in June 2015. Ramp-up in operations post this led to 27% YoY growth in

revenue to INR5.7b in FY16. Growth, however, again fell in FY17 due to the

company’s focus on profitability, rather than just revenue growth.

With ongoing cost-efficiency measures, a healthy order book and client additions,

we expect JLS to record better revenue growth going forward with improved

profitability.

4 July 2017

Jubilant Life Sciences

1.4

API: Debottlenecking and capacity increase to

improve sales

JLS has been into the API business since 2003 with a focus on production for the

cardiovascular system (CVS) and central nervous system (CNS) therapeutic areas,

besides some anti-infective, analgesic and antispasmodic products.

In terms of geographies, JLS supplies APIs to markets like North America, South

America, Europe, Japan, Korea, Commonwealth of Independent States (CIS)

countries, the Middle East, and Australia.

JLS has an API facility at Nanjangud, with very large capacities for Carbamazepine,

Oxcarbazepine, Citalopram, Lamotrigine, Donepezil, Pinaverium Bromide, Meclizine,

Escitalopram and Azithromycin Monohydrate.

Decent growth as capacity

constraint eases

JLS has 40 commercial APIs emphasizing on CVS, CNS, anti-infective and anti-

ulcerants, which are marketed to some leading generics companies. The company

has also filed for 88 drug master files (DMFs).

Exhibit 17: API sales to rise on capacity increase and new product launches

API,

20.2%

API sales (INR bn)

13.3

4.0

(2.7)

5.8

6.3

13.3

8.0

Yoy Growth (%)

10.0

15.0

18.0

5.1

5.3

5.1

6.9

8.0

9.4

Source: MOSL, Company

Note: API sales as a % of

pharmaceuticals sales in FY17.

Source: MOSL, Company

The facility is utilized for captive and third-party sales. There was downtrend in API

sales growth in FY15 due to capacity constraints. However, addition of a new block

led to sale of incremental volumes, resulting in good growth in FY16. The ongoing

exercise of debottlenecking of the existing plant, improving efficiency and new

product launches are expected to drive JLS’ API sales growth in FY18 and FY19.

JLS has earmarked capex of INR2-2.5b over the next two years, which is expected to

lead to better growth FY19 onward.

4 July 2017

Jubilant Life Sciences

1.5

SDF & DDS: Product pipeline strong for SDF, good

option for outlicensing in DDS

JLS’ primary focus is on developing, manufacturing and sale of proprietary solid

dosage formulations (SDF), including value-added formulations for CVS, CNS and

anti-allergy categories.

JLS enjoys leadership in the US for methylprednisolone, terazosin and lamotrigine,

as well as meclizine, cyclobenzaprine, prochlorperazine, donepezil and HCTZ caps. In

Europe, the company’s key strengths include regulatory affairs services, formulation

development and licensing of marketing authorizations, in addition to supplies of

SDF to makers of generic products.

JLS supplies formulations through Roorkee (Uttarakhand, India) and Salisbury

(Maryland, USA).

About 70% of SDF are sold in the US market, while the rest are sold in the ROW

market. JLS’ SDF segment continues to deliver ~20-25% YoY growth in the ROW

market due to its country-specific strategy of marketing & distribution.

In Japan, JLS has been pursuing product-specific partnerships with local players,

supported by in-house, country-specific product development. The company is

strengthening its pipeline and distribution partnership in the Australia market.

Branding and new product launches have been its focus areas in Asia, Middle-East

and South Africa.

JLS to have good ANDA

filing rate going forward

However, overall growth in the SDF segment has been impacted due to pricing

pressure in its key products (like methylprednisolone) and industry wide

consolidation in the US market. As a result, overall annual run-rate of SDF sales has

remained stable over the past 3-4 years.

Exhibit 18: Healthy product pipeline to aid future growth, subject to approval

SDF,

26.1%

55.0

SDF sales (INR bn)

Yoy Growth (%)

5.3

0.3

8.8

(3.5)

8.5

(3.9)

8.1

2.0

8.3

2.5

8.5

3.5

8.8

8.3

8.8

Source: MOSL, Company

Note: SDF sales as a % of

pharmaceuticals sales in FY17.

Source: MOSL, Company

There would some improvement in growth, as JLS has a strong pipeline of 81 ANDAs

filed (30 pending for approval as on 31 March 2017).

4 July 2017

Jubilant Life Sciences

Exhibit 19: 81 ANDAs filed, with a strong pipeline of 30 awaiting approval

Filings

Approved

Source: MOSL, Company

We expect moderate 3% CAGR (FY17-20) in SDF business sales to INR9.2b.

Increased high-margin products to drive pharma EBITDA margin

JLS delivered highest-ever EBITDA margin in the pharma segment in FY17 due the

increased share of the high-margin specialty business compared to generics.

Exhibit 20: Pharma EBITDA margin to gradually inch upward

EBITDA Margin (%)

30.3

24.2

17.4

30.5

31.3

33.4

34.7

36.1

Source: MOSL, Company

EBITDA margin contracted in FY15, largely due to the adverse impact of warning

letter for its Spokane facility and one-off expenses. However, implementation of

remediation measures, close-out of warning letter and increased traction in the

specialty segment led to improvement in margins in FY16 and FY17.

We expect EBITDA margin to expand further, albeit at slower pace compared to

previous years, due to:

Focus on reducing cost associated with manufacturing in CMO business

Robust growth in high-margin radiopharma business

Increased traction in allergy products due to improved reach

Improved volumes in API segment and further economies of scale, led by

debottlenecking.

Overall, we expect EBITDA margin to expand 480bp to 36.1% over FY17-20E.

4 July 2017

Jubilant Life Sciences

Investment Argument 2:

Specialty intermediates to drive LSI business

In the life science ingredients (LSI) segment, specialty intermediates and nutritional

products (SINP) form ~52% of sales, while life science chemicals account for the

remaining ~48%.

As shown in the exhibit below, JLS has produced multiple products in LSI using

molasses, acetic acid, methanol and ammonia as major raw materials.

Exhibit 21: Flow chart of LSI products

Life Sciences Chemicals

Molasses

Specialty Gases

Ethanol

Acetic Acid

Ethyl Acetate + Acetic Anhydride

Backward Integration

Formaldehyde

Methanol

Acetaldehyde

Ammonia

Pyridine

Beta

Forward Integration

Fine

Ingredients

Crop Science

Chemicals

Vitamins

Animal

Nutrition

Specialty Ingredients & Nutrition

Source: MOSL, Company

Over the years, JLS has integrated its processes (both forward and backward) to not

only improve revenues but also profitability.

The key products in this space are fine ingredients, crop science chemicals,

nutritional products, ethyl acetate and acetic anhydride.

Fine ingredients, crop science chemicals and nutritional products are clubbed as

SNIP, while ethyl acetate and acetic anhydride are clubbed as life science chemicals.

New product launches and increased traction in existing products to

improve SNIP performance

4 July 2017

Jubilant Life Sciences

Specialty intermediates form ~67% of SNIP and nutritional products.

Exhibit 22: Revenue share more or less equal from both

segment

Exhibit 23: Growth to remain on uptrend

Life Science Ingredients revenue

19.1% 22.9%

Life Science

Chemicals ,

48%

Speciality

intermediates

& Nutritional

Products,

52%

2.2%

-12.6%

25.0

30.8

31.4

27.5

27.1

-1.5%

Growth

9.5% 10.1%

10.9%

36.2

29.7 32.6

Source: MOSL, Company

SNIP revenue (INR bn)

21.4

24.4

Source: MOSL, Company

Yoy Growth (%)

Exhibit 24: Growth expected to increase on account of capacity expansion/price hikes

11.0

(3.5)

17.2

16.6

(6.9)

15.5

(9.7)

14.0

11.5

12.5

13.9

15.5

17.3

19.5

Source: MOSL, Company

We note that growth in specialty intermediates and nutritional products has been

on downtrend due to:

Low demand for pyridine from China – a major market for JLS – due to the ban

on paraquat manufacturing in aqueous form for domestic use. Anti-dumping

duty imposed by China also impacted profitability in FY14 and FY15. Since then,

JLS has reduced its exposure to China for pyridine-based products, and with

increased business from other markets, there has been steady growth in the

past quarters.

However, JLS’ revenues declined again in FY17, largely due to lower input and

crude prices, which led to a reduction in finished product prices as well.

Technical issues led to lower capacity utilization for products in the crop science

category.

The nutritional products segment, however, delivered positive growth in FY14 and

FY15 due to volume growth and better capacity utilization. Revenues have been

stable in FY16 and FY17 due to maximum capacity utilization.

4 July 2017

Jubilant Life Sciences

Management has guided for better growth over the next 2-3 years, led by:

Capacity enhancement due to retrofitting, and new product launches are likely

to aid growth. JLS has guided for atleast seven new product launches in FY18.

JLS has commissioned an alpha gamma plant, and launched Alpha Picoline and

Gamma Picoline.

Management has taken price hikes, which is expected to drive growth over the

next two years in nutritional products.

Life science chemicals to maintain momentum over medium term

The LSC segment exhibited better growth in FY17 compared to the previous years

due to improved crude oil prices and higher demand from global agrochemical

customers. As a result, there has been increased demand for Ethyl Acetate and

acetic acid which are major products of JLS in life science chemical segment.

Exhibit 25: Stable growth going forward on account of demand

16.4

Life Science Chemicals Revenue (INR bn)

21.0

9.5

9.2

(19.0)

13.5

14.8

12.0

13.1

Yoy Growth (%)

8.0

8.5

9.0

11.2

14.1

15.3

16.7

Source: MOSL, Company

We expect revenue growth to be stable led by demand improvement; however,

revenue growth is also subject to the crude oil price trend.

4 July 2017

Jubilant Life Sciences

EBITDA margin in LSI segment to improve gradually

JLS has delivered better EBITDA margin in FY16 and FY17 v/s FY15, largely on

account of its focus on relatively high-margin products, cost-optimization initiatives

and improved process efficiencies.

Exhibit 26: Focus on high-margin products to lead to gradual rise in EBITDA margin

EBITDA Margin (%)

16.3

15.7

15.8

16.0

16.6

16.9

17.5

10.2

Source: MOSL, Company

EBITDA margin shrunk in FY15, largely due to unabsorbed cost in Symtet products in

the crop science segment. In addition, the anti-dumping duty imposed by China in

advanced intermediates led to volumes and margins contraction.

However, JLS has reduced exposure to China for pyriudine based products and

increased its business from other markets. Also, JLS has taken price hikes in

nutritional products, which would aid margins improvement. Furthermore, new

product launches would result in higher capacity utilization and better cost

efficiency, leading to better EBITDA margin in the crop science segment.

4 July 2017

Jubilant Life Sciences

Manufacturing facilities and inspection status

Exhibit 27: Manufacturing facilities

Name of the plant

Cadista (USA)

Roorkee (India)

Spokane (USA)

Montreal JDI (Canada)

Montreal (Canada)

Nanjanguda (India)

Remarks

Manufactures solid dosage formulations (Pharma generics)

CMO of sterile injectables

Develops, manufactures and markets radiopharmaceuticals

CMO of sterile injectables

API Manufacturing

Source: MOSL, Company

Exhibit 28: Inspection status

Last Inspected on

FDA (USA)

Health Canada (Canada)

PMDA (Japan)

SLA/CDSCO (India)

ANVISA (Brazil)

Tc Sagak (Turkey)

Cofepris (Mexico)

Mar'15

Aug'15

Source: MOSL, Company

Dec'15

Sep'15

May'16

Feb'17

Cadista-USA

March'17

Roorkee-India

March'17

CMO/Allergy-

Spokane

Nov'16

CMO-Montreal

Dec'16

Sep'15

JDI-Montreal Nanjangud-India

Dec'16

Apr'16

May'16

Sep'16

Mar'15

Oct'15

Exhibit 29: Capex outlook robust over next three years

17.1

Capex (INR b)

13.7

4.8

7.3

7.1

2.8

2.6

3.4

4.1

4.5

5.9

6.8

As % of sales

6.8

4.5

6.9

5.0

4.9

4.0

Source: MOSL, Company

JLS incurred total capex of INR4.1b in FY17 toward capacity enhancement and

maintenance of existing facilities. The company has guided for capex of INR9b over

the next 2-3 years, of which ~INR 2.5b would be spent on capacity expansion of API

facility, INR1b on other pharma business, and INR2.5b as annual maintenance capex

in both the pharma and LSI segments.

4 July 2017

Jubilant Life Sciences

Financial performance to improve with revenue growth

kicking in

We expect JLS to post improved revenue growth over FY17-20, backed by superior

performance in the pharma and LSI segments. We expect overall revenue CAGR of

10.5% over FY17-20.

Within the pharma segment, we expect radiopharma, CMO, allergy and API to post

CAGR of 18%, 11.5%, 20% and 14%, respectively. This should lead to 12.4% CAGR in

the pharma segment.

Within the LSI segment, we expect specialty intermediates and nutritional products

to post CAGR of 10.3%, resulting in segment CAGR of 9.5%.

Exhibit 30: Revenue growth, which was subdued till FY17, to improve over next 3-4 years

Total Revenue (INR b)

51.7

58.0

58.3

58.0

60.1

65.9

72.9

82.2

Source: MOSL, Company

With better growth and a superior product mix, the gross margin is expected to

improve gradually to 67.4% in FY20 from 66.7% in FY17. In addition, cost efficiency

would lead to EBITDA margin improvement from 22.4% in FY17 to 24.5% in FY20.

Exhibit 31: Superior product mix and cost optimization to continue driving margins

EBITDA Margin (%)

62.6

60.1

57.9

54.3

63.5

Gross Margin (%)

66.7

67.1

67.2

67.4

20.4

17.4

22.0

11.8

22.4

23.9

24.3

24.5

Source: MOSL, Company

4 July 2017

Jubilant Life Sciences

Overall R&D spend (including charged to P&L and capitalized) as % of pharma sales

has been increasing gradually. R&D spent increased to INR2.6b in FY17, accounting

for 7.9% of pharma sales, which was largely toward radiopharmaceuticals and

development of products for the US market. We expect R&D spend toward

radiopharmaceuticals to inch up further over FY18-20.

Exhibit 32: R&D spend to rise on absolute level and as % of pharma sales

R&D Expenditure (INR bn)

8.3

5.9

6.4

5.0

6.0

R&D as % of pharma sales

8.2

8.5

1.4

1.6

1.3

1.8

2.6

2.8

3.3

3.8

Source: MOSL, Company

4 July 2017

Jubilant Life Sciences

Financial leverage and interest cost to decline

Over the past two years, JLS has reduced its net debt by INR8.7b, which has not only

reduced financial leverage but also lowered interest burden. Also, there has been a

reduction in interest rate from 7.6% in FY16 to 6.8% in FY17 on a blended basis.

Exhibit 33: Debt composition

Particulars (In INR b)

Foreign Currency Loans

Rupee Loans

Gross Debt

Cash & Cash Equivalent

Net Debt

FY17

27.6

13.2

40.9

4.6

36.3

Source: MOSL, Company

As a result, overall interest outgo reduced from INR3.8b in FY16 to INR2.6b in FY17

on adjusted basis. Reported interest cost in FY17 is higher due to the inclusion of

charge from stock settlement instrument of INR540m and one-time cost of INR320m

due to the replacement of high-cost debt with low-cost debt. INR540m is non-cash

debit to P&L on account of convertible instrument issued to IFC of USD60m as a

mandatory conversion option at IPO of JPL.

Exhibit 34: Interest coverage ratio is increasing due to reduced debt and low cost

Interest Coverage Ratio

6.6

4.2

5.2

2.7

2.2

1.1

2.5

3.1

Source: MOSL, Company

JLS has guided for debt reduction of INR6bn over next 2 years

Conversion of IFC debt to shares – one way to reduce debt

Jubilant Pharma, a wholly owned subsidiary of JLS, has obtained unsecured loan of

USD60m from IFC, which is due for repayment on 15 June 2020 (50%) and 15 June

2021 (50%), along with repayment of premium in accordance with the terms of the

contract, if on or prior to such repayment date there has been (a) neither a private

equity (PE) investment nor a qualifying IPO, or (b) there has been a PE investment,

but IFC has not converted the entire loan into shares.

4 July 2017

Jubilant Life Sciences

Thus, one of the routes to reduce debt would be IPO of Jubilant Pharma to provide

exit option for IFC, which effectively would reduce book value of debt by USD60m.

Jubilant Pharma board has resolved in its meeting held in April 2017 that it would

evaluate option of fund raising through an IPO by listing in an international stock

exchange, including Singapore, in FY18, to strengthen balance sheet of Jubilant

Pharma (JPL) with dilution of not more than 15%.

Better revenue growth, coupled with improving margin, would result in improved

operating cash flow, which would also enable further debt reduction. This would

also improve overall profitability with lowering of interest outgo.

Exhibit 35: Some options available to reduce debt over 2-3 years

Gross Debt (INR bn)

7.0

5.5

42.4

43.9

47.9

45.1

40.8

7.4

Interest as a % of Average of gross Debt

8.4

8.0

38.2

36.8

33.8

30.8

Source: MOSL, Company

4 July 2017

Jubilant Life Sciences

Return ratios to exhibit upward trajectory

There has been a sharp improvement in the return ratios over the past two years,

primarily led by EBITDA margin expansion and debt reduction.

Exhibit 36: Better revenue growth and ongoing margin improvement to drive RoCE

ROE (%)

15.6

9.9

7.2

9.5

(4.2)

(6.2)

11.0

ROCE (%)

18.1

19.6

19.9

10.9

7.2

12.0

13.0

13.9

Source: MOSL, Company

EBITDA margin improved from 11.8% in FY15 to 22.4% in FY17, largely due EBITDA

margin expansion of 1,375bp in the pharma segment and 580bp in the LSI segment.

With improving operating margin and lower interest outgo, JLS delivered profit of

INR5.75b in FY17 from loss of INR578m in FY15.

We expect RoCE to further improve to 13.9% by FY20 from 11% in FY17, led by

revenue growth, better operating margin and lower interest outgo.

RoE is also expected to increase, although at a lower rate than RoCE, due to a

reduction in financial leverage. We expect RoE to increase from 18.1% in FY17 to

20% by FY20.

Sensitivity analysis

In our base case, we factor in revenue and PAT CAGR FY17-20E of 11% and

22.9% to INR82b and INR10.6b, respectively, led by increased business from the

pharma and LSI segments. We expect the EBITDA margin to continue its uptrend

to reach 24.5% by FY20 from 22.4% in FY17.

In our bear case, sales and PAT CAGR would reduce to 5.5% and 12.2%,

respectively, led by lesser-than-anticipated business from specialty pharma and

delay in new product launches in specialty ingredient/nutritional products.

Accordingly, 12M forward EPS would be INR48, and the price target would be

INR616, implying limited downside.

In our bull case, sales and PAT CAGR would be 13% and 27.6% to INR87b and

INR12b over FY17-20, respectively, led by better-than-anticipated business from

specialty pharma and superior execution in specialty ingredient/nutritional

products. Accordingly, 12M forward EPS would be INR65.4, and the price target

would be INR1,052, implying upside of 52% from current levels.

4 July 2017

Jubilant Life Sciences

Exhibit 37: Sensitivity analysis indicates limited downside from current levels

Sensitivity Analysis

Revenue (INR m)

EBITDA (INR m)

EBITDA margin %

PBT (INR m)

Tax rate (%)

PAT (INR m)

EPS

SOTP based Target price

% Return

Bear Case

66,102

15,336

9,352

22.1

7,296

46.9

616

-11.0

Base Case

72,949

17,727

11,760

25.0

8,831

56.7

905

30.8

Bull Case

75,201

18,274

12,328

22.1

9,614

61.7

1,052

52.0

Source: MOSL

4 July 2017

Jubilant Life Sciences

Valuation

JLS has exhibited considerable improvement in its financial performance, led by

margin improvement over the past two years. In addition, based on

management outlook, there are enough levers in place to gain further traction

in earnings via revenue and margins improvement. Compared to previous years,

margin improvement is expected to be gradual, but revenue growth should be

much higher.

The stock price has almost doubled in the past year and is up 15% in the past six

months. Despite this, we believe that the current price has not adequately

factored in the company’s current performance as well as future growth in

earnings. In addition to improving financials, there is reasonable valuation

comfort at these levels.

We expect revenue CAGR of 11% to reach INR82b in FY20. We also expect

EBITDA CAGR of 14.4%, led by improved efficiency. Further reduction in interest

outgo, coupled with EBITDA growth, is expected to lead to PAT CAGR of 22.9%

to INR10.6b by FY20.

We value the pharma business at 11x 12M forward EBITDA, which is industry

average multiple, to arrive at pharma EV of INR151b. We value the life science

intermediates business at 4.5x 12M forward EBITDA to arrive at life science

ingredient EV of INR25.8b. Reducing the net debt, we arrive at an SOTP-based

valuation of INR141b.

12M forward

13,787

151,662

5,729

4.5

25,781

177,443

36,250

141,193

905

692

30.8

Source: MOSL

Exhibit 38: We arrived at price target of INR905 on SOTP based valuation

Valuation

EBITDA of Pharma business (INR m)

EV/EBITDA multiple for JLS

EV of Pharma (INR m)

EBITDA of LSI business (INR m)

EV/EBITDA multiple for JLS

EV of LSI (INR m)

Total EV (INR m)

Net Debt

Market Cap (INR m)

Target Price (INR per share)

CMP

Potential upside (%)

We initiate coverage on JLS with a

Buy

rating and a target price of INR905.

A miss on execution expectations would result in lower growth in revenues from

radiopharma and allergy products.

Lower-than-expected acceptance of innovative radiopharma products may

impact revenue and profit growth.

Delay in ANDA approvals in the US market may result in loss of opportunity and

thus reduce profitability of formulation generics.

Risks

4 July 2017

Jubilant Life Sciences

Exhibit 39: Peer comparison

Sales

FY17

Ajanta

Dishman

Indoco

Natco

Unichem

Alembic

Biocon

Jubilant

Granules

FY18E

FY19E

20,020 22,628 27,519

16,339 18,557 20,982

10,694 12,560 14,458

20,650 21,498 25,602

15,195 18,043 20,683

31,013 36,205 42,251

38,760 48,901 60,180

60,063 65,860 72,949

14,353 17,051 23,390

EBITDA margin

FY17

34.9

28.4

14.6

33.1

12.5

19.7

24.1

22.4

20.8

FY18E

34.7

28.0

16.1

36.5

13.4

20.6

24.0

23.9

21.6

FY19E

34.2

29.2

17.0

37.5

14.2

21.7

25.5

24.3

22.4

FY17

5,168

1,454

771

4,860

1,087

4,068

6,118

5,756

1,654

PAT

FY18E

5,869

2,259

1,025

4,842

1,552

4,908

6,611

7,370

2,060

FY19E

7,063

2,977

1,337

5,811

1,946

6,052

8,980

8,831

2,883

FY17

26.4

33.43

24.19

36.06

22.51

23.3

32.5

18.7

18.4

P/E

FY18E

23.3

21.29

18.17

36.01

15.66

19.3

30.1

14.6

16.4

FY19E

19.3

15.84

13.92

28.76

12.49

15.7

22.2

12.2

11.7

EV/EBITDA

FY17

19.3

12.5

13.12

25.78

13.26

15.3

21.4

11.4

FY18E

16.9

10.93

10.12

22.42

10.38

12.6

17.2

9.1

9.3

FY19E

13.8

9.25

8.36

18.33

8.53

10.1

12.9

7.8

6.8

Source: MOSL, Bloomberg

4 July 2017

Jubilant Life Sciences

About Jubilant Life Science

Jubilant Life Sciences (JLS), one of the three flagship companies of Jubilant

Bhartia Group, is an integrated pharmaceuticals and life sciences company. It is

engaged in the manufacture of radiopharmaceuticals, allergy products, advance

intermediates, nutritional products and life science chemicals.

The company also provides services in contract manufacturing and drug

discovery solutions.

JLS’ operations are spread across the world, including India, the US, Canada,

Europe and other countries.

Key personnel at JLS

Shyam S Bhartia – Chairman

Shyam S Bhartia is chairman of JLS and Jubilant FoodWorks. He is also chairman &

managing director of Jubilant Pharma. Mr Bhartia holds bachelors’ degree in

commerce from St. Xavier’s College, Calcutta University. He is a qualified cost and

works accountant, and a fellow member of the Institute of Cost and Works

Accountants of India (ICWAI). He serves on the boards of several public, private and

foreign companies like Chambal Fertilizers and Chemicals Limited, India; Safe Food

Corporation, USA. Mr Bhartia was also director on the board of Air India.

Hari S Bhartia – Co Chairman & Managing Director

Hari S Bhartia is co-chairman & managing director of JLS, co-chairman of Jubilant

FoodWorks, and chairman of Jubilant Industries. A chemical engineering graduate

from the Indian Institute of Technology (IIT), Delhi, Mr Bhartia was conferred the

Distinguished Alumni award by his alma mater in 2000. He is former president of the

Confederation of Indian Industry (CII)(2010-2011) and a member of several

educational, scientific and technological programs of the Government of India. Mr

Bhartia is also a member of several CEO Forums, the prominent ones being India-

USA CEO Forum and India-France CEO Forum.

R Sankaraiah – Executive Director, Finance

Mr. R Sankaraiah, holds a Bachelor’s degree in Science and is a member of the

Institute of Chartered Accountants of India. He has been a member of the IFRS

advisory council of the International Accounting Standards Board, SEBI’s committee

on Disclosures and Accounting Standards as well as the member of CII National

Council on Corporate Governance and Regulatory Affairs. He has over 30 years of

experience in areas including M&A, financial engineering, profit management

systems, forex management and taxation.

G.P. Singh – CEO, Jubilant Pharma

GP Singh is CEO of Jubilant Pharma. Prior to joining Jubilant, he was serving as

president of Sun Pharma, USA. Mr Singh has extensively worked in various

leadership roles pertaining to strategy, M&A, commercial and operations with 23+

years of industry experience. He holds masters in pharmacy, pharmaceutical

chemistry from the Punjab University.

4 July 2017

Jubilant Life Sciences

Pramod Yadav – Whole-time director & co-CEO Life Science Ingredients

Pramod Yadav holds bachelor’s degree in technology from the Institute of Chemical

Technology, and master’s degree in marketing management from Jamnalal Bajaj

Institute of Management Studies. He has spent 21 years at JLS, and has more than

30 years of overall work experience.

Rajesh Srivastava – Co-CEO Life Sciences Ingredients

Rajesh Srivastava is the Co-CEO, Life Science Ingredients business of JLS. Rajesh’s

association with Jubilant is now over 16 years. Since his joining, he has led the

Company in charting growth strategies for JLS Ingredients business. As a Co-CEO of

Life Science Ingredients business, he is leading business operations of business

segments offering value added specialty ingredients & acetyls product range of

products used in various industries globally like Pharmaceuticals, Agrochemicals,

Personal Care and many such industries. He is an Engineer with specialization in

chemical technology from HBTI, Kanpur and Master in Marketing Management from

Jamnalal Bajaj Institute of Management Studies, Mumbai.

4 July 2017

Jubilant Life Sciences

Financials and Valuations

Consolidated - Income Statement

Y/E March

Total Income from Operations

Change (%)

Raw Materials

Employees Cost

Other Expenses

Total Expenditure

% of Sales

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income

PBT bef. EO Exp.

EO Items

PBT after EO Exp.

Total Tax

Tax Rate (%)

Minority Interest

Reported PAT

Adjusted PAT

Change (%)

Margin (%)

FY13

51,660

20.1

20,609

9,626

10,866

41,101

79.6

10,559

20.4

2,538

8,021

2,987

299

5,333

-1,922

3,411

1,524

44.7

361

1,527

2,591

68.0

5.0

FY14

58,034

12.3

24,421

11,052

12,485

47,958

82.6

10,076

17.4

2,812

7,264

3,237

191

4,218

-2,145

2,073

696

33.6

286

1,090

2,515

-2.9

4.3

FY15

58,263

0.4

26,617

10,903

13,850

51,370

88.2

6,893

11.8

2,880

4,013

3,553

425

884

-481

403

805

199.6

176

-578

-1,057

-142.0

-1.8

FY16

58,023

-0.4

21,175

11,267

12,803

45,246

78.0

12,778

22.0

3,460

9,318

3,786

136

5,669

175

5,843

1,528

26.2

4,315

4,186

-496.1

7.2

FY17

60,063

3.5

19,995

12,310

14,306

46,611

77.6

13,452

22.4

2,914

10,538

3,411

249

7,376

1,630

22.1

-10

5,756

37.5

9.6

FY18E

65,860

9.7

21,668

13,304

15,148

50,119

76.1

15,740

23.9

3,240

12,501

2,962

273

9,812

2,453

25.0

-11

7,370

28.0

11.2

(INR Million)

FY19E

72,949

10.8

23,927

14,663

16,632

55,223

75.7

17,727

24.3

3,552

14,174

2,717

302

11,760

2,940

25.0

-11

8,831

19.8

12.1

FY20E

82,170

12.6

26,787

16,516

18,735

62,038

75.5

20,132

24.5

3,790

16,341

2,469

340

14,212

3,553

25.0

-12

10,671

20.8

13.0

Consolidated - Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Minority Interest

Total Loans

Deferred Tax Liabilities

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Goodwill on Consolidation

Capital WIP

Total Investments

Curr. Assets, Loans&Adv.

Inventory

Account Receivables

Cash and Bank Balance

Loans and Advances

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

FY13

159

24,602

24,761

1,115

42,452

2,922

71,251

50,244

19,027

31,217

18,457

4,369

256

29,409

11,162

7,086

3,561

7,601

12,458

6,893

2,167

3,398

16,951

71,251

FY14

155

26,111

26,265

1,579

43,953

2,371

74,168

53,614

22,319

31,295

19,693

4,724

340

32,587

13,414

8,059

4,795

6,318

14,471

7,498

2,205

4,768

18,116

74,168

FY15

159

24,376

24,535

47,931

2,380

74,847

54,245

24,508

29,737

19,376

5,966

395

30,714

12,353

8,193

3,944

6,225

11,342

7,669

2,028

1,645

19,372

74,847

FY16

159

28,936

29,096

45,167

3,269

77,532

58,129

27,705

30,425

20,489

5,936

361

32,260

12,161

9,297

3,445

7,357

11,938

6,204

2,936

2,799

20,321

77,532

FY17

156

34,205

34,360

-393

44,311

445

78,724

64,064

30,619

33,445

17,622

6,838

1,294

29,788

12,204

10,053

4,596

2,935

10,264

7,495

1,604

1,165

19,524

78,724

FY18E

156

40,839

40,995

-393

40,311

445

81,358

71,784

33,858

37,926

17,622

3,618

1,294

31,994

13,123

11,023

4,630

3,218

11,095

8,059

1,759

1,277

20,899

81,359

(INR Million)

FY19E

156

48,790

48,945

-393

37,311

445

86,308

77,178

37,411

39,767

17,622

3,224

1,294

36,644

14,459

12,210

6,411

3,564

12,243

8,880

1,948

1,415

24,401

86,309

FY20E

156

58,397

58,552

-393

35,311

445

93,916

81,757

41,201

40,556

17,622

2,645

1,294

45,563

16,243

13,753

11,551

4,015

13,764

9,976

2,195

1,594

31,799

93,916

4 July 2017

Jubilant Life Sciences

Financials and Valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

FCF per share

Return Ratios (%)

RoE

RoCE

RoIC

Working Capital Ratios

Fixed Asset Turnover (x)

Asset Turnover (x)

Inventory (Days)

Debtor (Days)

Creditor (Days)

Leverage Ratio (x)

Current Ratio

Interest Cover Ratio

Net Debt/Equity

FY13

16.6

32.9

159.0

3.1

36.6

FY14

16.2

34.2

168.7

3.0

49.9

FY15

-6.8

11.7

157.6

3.1

-99.6

-102.0

59.1

4.4

2.6

22.0

0.4

27.9

-4.2

-6.2

1.1

0.8

2.7

1.1

1.8

FY16

26.9

49.1

186.9

3.1

13.3

25.7

14.1

3.7

2.6

11.7

0.4

47.5

15.6

9.5

10.4

1.0

0.7

2.7

2.5

1.4

FY17

37.0

55.7

220.7

3.1

10.0

18.7

12.4

3.1

2.5

11.0

0.4

62.9

18.1

11.0

12.3

0.9

0.8

2.9

3.1

1.1

FY18E

47.3

68.1

263.3

3.9

10.0

14.6

10.2

2.6

2.2

9.1

0.6

47.8

19.6

12.0

13.6

0.9

0.8

2.9

4.2

0.8

FY19E

56.7

79.5

314.4

4.7

10.0

12.2

8.7

2.2

1.9

7.8

0.7

51.8

19.6

13.0

14.4

0.9

0.8

3.0

5.2

0.6

FY20E

68.5

92.9

376.1

5.7

10.0

10.1

7.5

1.8

1.6

6.5

0.8

66.3

19.9

13.9

15.9

1.0

0.9

3.3

6.6

0.4

34.2

10.9

7.2

7.6

1.0

0.7

2.4

2.7

1.6

0.4

33.9

9.9

7.2

7.6

1.1

0.8

2.3

2.2

1.5

Consolidated - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

Others

CF from Operating incl EO

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Issue of Shares

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

FY13

3,411

2,538

2,874

-1,196

-40

7,587

2,112

9,699

-4,378

5,321

-54

123

-4,309

-992

-2,957

-548

-4,498

892

2,668

3,561

FY14

2,073

2,812

3,185

-809

-1,107

6,153

1,569

7,723

-2,438

5,285

-63

156

-2,344

-247

-3,345

-552

-4,144

1,235

3,561

4,795

FY15

403

2,880

3,491

-793

964

6,945

888

7,833

-3,491

4,341

-42

-125

-3,658

-1,136

-3,353

-538

-5,027

-852

4,795

3,944

FY16

5,843

3,460

3,758

-481

-1,467

11,114

-191

10,923

-3,532

7,391

257

-3,198

-4,319

-3,335

-569

-8,223

-499

3,944

3,445

FY17

7,376

2,914

3,163

-1,630

1,949

13,771

-3,970

9,801

-933

-2,881

-7,784

-4

-856

-3,411

-574

-4,835

1,152

3,445

4,597

FY18E

9,812

3,240

2,689

-2,453

-1,341

11,947

-4,500

7,447

273

-4,227

-4,000

-2,962

-735

-7,686

4,597

4,630

(INR Million)

FY19E

11,760

3,552

2,415

-2,940

-1,722

13,065

-5,000

8,065

302

-4,698

-3,000

-2,717

-881

-6,586

1,781

4,630

6,411

FY20E

14,212

3,790

2,129

-3,553

-2,257

14,321

-4,000

10,321

340

-3,660

-2,000

-2,469

-1,064

-5,521

5,140

6,411

11,551

4 July 2017

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Jubilant Life Sciences

4 July 2017

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