Jubilant Life Sciences extends rally post Q1 results

Jubilant Life Sciences rallied 8% to hit a record high of Rs 474 on the BSE. In past seven trading sessions, the stock of pharmaceutical company surged 44% from Rs 330 on August 8, after reported a healthy margin expansion. The S&P BSE Sensex was down 0.13% during the same period.

The Ebitda (earnings before interest, taxes, depreciation and amortisation) margin expanded by 350 basis points at 26.2% for the quarter ended June 2016 (Q1FY17), up from 22.7% in the same quarter last year.

“Jubilant Life Sciences continues to see a recovery in most of its businesses, which faced multiple challenges during the past couple of years. Although a steep decline in crude prices impacted revenue in Life Science Chemical (LSI) business in Q1, the overall business saw a strong traction in profitability during the quarter,” according to an analyst at Systematix Institutional Equities.

Analyst maintains a ‘buy’ rating, with a target price of Rs 555.

The operating performance in Q1 surprised us positively on the margin front, though revenue was lower than expectation. The management’s indication of a healthier growth in FY17 is built on the higher capacity utilisation in CMO business (better order book position), new products (generics) launched in the US, stronger traction in Radiopharma business and gradual ramp-up in LSI business, it added.

At 12:02 pm, the stock was trading at Rs 473 on the BSE on back of a more than two-fold jump in trading volumes. A combined 4.84 million shares changed hands on the BSE and NSE so far.

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