Jubilant Life

Jubilant Life Sciences had been battered down last week after it announced having received a warning letter from the USFDA over violation of manufacturing norms at its manufacturing plant, Jubilant HollisterStier, LLC (JHS) located at Spokane, Washington state. JHS-Spokane will respond to this warning letter on or before December 12, 2013, will identify corrective actions already been completed as well as some pending corrective actions to ensure on-going cGMP (current good manufacturing practice) compliance. The US FDA has stated clearly that until all corrections have been completed and that they have confirmed correction of the violations and firm compliance to cGMPs, FDA may withhold approval of new applications or supplements listing JHS-Spokane as the drug product manufacturer.

This issue apart though, the company is on a sound footing. For Q2FY14, it posted a consolidated net loss of Rs.81 crore v/s net profit of Rs.152 crore (YoY). This loss can be directly attributed to the one-time exceptional loss of Rs.150 crore. Its consolidated revenue was up 17% at Rs.1436 crore. Its international revenue rose 21% at Rs.1070 crore and this contributes 75% to the total sales. EBIDTA margin came in at 19.2%.

In terms of segment break-up, Income from operations of the Pharma business stood at Rs. 691 crore, showing growth of 6% YoY and contributing 48% to the revenue mix. Income from operations for the Life Science Ingredients segment was at Rs. 744 crore, thus improved by 30% YoY and having 52% of share in total revenues. And in terms of geographical break-up, Q2FY2014 revenues from North America stood at 9% improved YoY at Rs. 559 crore, contributing 39% in the overall revenues; revenues from Europe and Japan stood at Rs. 306 crore, up 28% with a share of 21% to the revenue mix. Domestic revenues grew 9% YoY at Rs. 366 crore thus giving a 25% share to the revenue mix. Revenues in ROW including China came in at Rs. 205 crore, better by 52%, with a 14% contribution to the revenue mix.

The stock turned around based on this strong performance and its outlook, wherein the company has stated that revenues and EBIDTA are expected to continue the uptrend and meet the growth targets set for FY2014. This is on account of improved capacity utilisations in Sterile Injctables and OCL, Nutrition Ingredients, Symtet and 3CP and backward integration of Pyridine and expansion to newer markets. The company expects price uptrend in Pyridine and Nutrition Ingredients to continue. It has a strong pipeline in API’s and Solid Dosage Formulation and it has lined up new product launches, expansion in newer geographies and robust order book in Sterile Injectables to improve outlook in H2FY2014, expected to be better than H1 FY2014.