Jubilant Life extends fall on weak Q4 results; stock hits 33-month low

Jubilant Life Sciences shares continued to remain under pressure, hitting 33-month low of Rs 503, down 2 per cent in intra-day trade on the BSE on Wednesday. The stock has fallen 19 per cent in the past nine trading days, after reporting weak March quarter earnings. The stock was quoting at its lowest level since August 29, 2016.

The pharmaceuticals company had reported a net loss of Rs 101 crore in the fourth quarter ended March 31, 2019 (Q4FY19) on account of a one-time loan settlement with International Finance Corporation (IFC). It had posted a consolidated net profit of Rs 152 crore in the year-ago period.

The company said its net profit in the quarter was hit by a one-time loan settlement with IFC that resulted in an exceptional item of Rs 235 crore for the quarter ended March 31.

Income from operations during the quarter under review grew 5.7 per cent at Rs 2,352 crore as compared to Rs 2,223 crore last year.

As of March 2019, the company said it has net debt of Rs 3,370 crore on a constant currency basis.

The management expects stable performance in FY20. The pharma segment is expected to continue to deliver steady revenues with rangebound margins across businesses. In life science ingredients (LSI) segment, growth will be led by nutrition and specialty intermediates businesses.

The stock has corrected 42 per cent from its recent high of Rs 874 on March 18, 2019, as compared to a 4 per cent rise in the S&P BSE Sensex.

Brokerage firm Equirus Securities expects LSI business to see a tepid growth of 2 per cent in FY20 despite expected commercialization of augmented capacities of new acetic anhydride plant in Q1FY20 owing to drop in acetic acid prices by 25 per cent which will eventually result into lower realizations of acetic anhydride and slower than expected turnaround in Vitamin B3 prices and demand.

The recent correction in the stock over the last three months completely factors in most concerns and we believe the risk-reward is favorable, it said.

Analysts at ICICI Securities expect specialty pharma to maintain growth momentum thanks strong growth and prospects for contract development and manufacturing organization (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,” the brokerage firm said in company update.


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