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Buy Jubilant Life Sciences, target price Rs 970: Motilal Oswal

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Motilal Oswal has given a buy rating to Jubilant Life Sciences with a target price of Rs 970. The share price moved down by 5.47 per cent from its previous close of Rs 829.60. The stock’s last traded price is Rs 584.25.

Jubilant Life Sciences Ltd., incorporated in the year 1978, is a Mid Cap company (having a market cap of Rs 13216.35 Crore) operating in Pharmaceuticals sector.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 1845.24 Crore, down 20.03 % from last quarter Sales of Rs 2307.32 Crore and down -14.29 % from last year same quarter Sales of Rs 2152.78 Crore. The Company reported net profit after tax of Rs 88.01 Crore in latest quarter.

jubilant-graph

Investment Rationale
The brokerage values JLS at 9x EV/EBITDA for the Pharma business and 4x EV/EBITDA for the LSI business, arriving at target price of INR975 on an SOTP basis. While the uptick in earnings growth is gradual (partly dented by COVID-19 in FY21), it remains positive on JLS on an attractive valuation of 7x FY22 EV/EBITDA.


Promoter/FII Holdings
Promoters held 50.7 per cent stake in the company as of June 30, 2020, while FIIs held 27 per cent, DIIs 1.6 per cent and public and others 20.8 per cent.

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