Shares of Jubilant Life Sciences shares surged 15 per cent today to a fresh 52-week high of Rs 506, extending their strong run since the pharma company announced its June quarter earnings last week.
Since August 9, the day Jubilant Life Sciences announced its Q1 earnings, the stock is up over 50 per cent, including today’s gains.
Despite the run-up in Jubilant Life Sciences shares, the valuations are attractive, says Surajit Pal of Prabhudas Lilladher, who has a positive stance on the shares.
Jubilant Life Sciences in its June quarter had posted a 22 per cent rise in consolidated net profit at Rs 161.60 crore on robust sales in the pharmaceutical segment. Net sales of the company rose to Rs 1,425.53 crore from Rs 1,400.97 crore in the same period of previous financial year.
The pharmaceuticals segment contributed 53 per cent or Rs 752 crore, to the overall revenue mix. Its life science chemicals business contributed 44 per cent or Rs. 618 crore. Another segment, drug discovery solutions, contributed Rs 50 crore or 3 per cent.
The margin expansion, in particular, buoyed the Street’s sentiment. Its overall operating or EBITDA margins in Q1 expanded to 26.2 per cent, up from 22.7 per cent in the same quarter of the previous year.
Its pharmaceuticals segment contributed about 70 per cent of the company’s operating profit with margins improving to 34 per cent, up from 32.2 per cent year-on-year.
The margins of life science ingredients business also improved to 19 per cent, up from 17.2 per cent.
Mr Pal says Jubilant Life Sciences is “very focused to reposition themselves as a pharma company. Their pharma business margin is around life-time high of 34 per cent. They have reduced debt in two consecutive quarters and the management has indicated that they will repay out of internal accruals, rather than the fresh flows. This is a big signal for investors.”
Mr Pal expects Jubilant Life Sciences to clock 30 per cent-plus margin in subsequent quarters in its pharma business.
During the June quarter, Jubilant Life Sciences brought down its net debt by Rs. 247 crore. The company management also expressed optimism over delivering “better performance going forward given the robust product pipeline in place.”
Jubilant Life Sciences has a total of 850 filings across geographies including 770 filings in oral solids and 80 filings in sterile products. Of this, 649 filings (578 oral solids and 71 sterile products) have been approved.
Jubilant Life Sciences shares ended 11.71 per cent higher at Rs 490 as compared to a 0.60 per cent rise in Nifty50 index.