IDBI Capital has given a buy recommendation on Jubilant Life Sciences with a target price of Rs 620.
Shares of Jubilant Life Sciences traded at Rs 481.4 around 3:05 pm on 18 June, 2019. The brokerage has set a one-year horizon for the stock to hit the target price.
As per the brokerage, Jubilant Life Sciences FY20/21E performance would be mainly driven by market share gains in key radiopharmaceutical products, ramp-up in CMO business with new clients/capacity additions, capacity additions in finished dosages and Life Science Chemical (LSI) segment and opportunities from the supply of ethanol to government.
The USFDAs warning letter on its Roorkee (formulation) and Nanjangud (API) facility indicates a procedural lapses and hence chances of escalation (Import Alert) appears to be remote.
The US generics business contributes nearly 22 per cent/13 per cent of Pharma/consolidated revenue.
The brokerage assumes 12 months time-frame to get resolution of WL, but a delay beyond 12 months will impact FY21E EPS by nearly 12-13 per cent.
A 46 per cent correction in stock (current market price implies 6.6 times FY21E EPS) post WL, seems overweighing concerns.
Apart from WL, these concerns also include-(a) slower off take iRead More – Source
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