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Citi Upgrades Jubilant Organosys

October 18, 2007

Jubilant’s 2QFY08 results were very strong, with a robust trend in revenues as well as profitability. The high margin PLSPS business (especially CRAMS) was the key growth driver and now contributes c60% of revenues.

2QFY08 was stronger than expected, with sales growth of 33% YoY (16% organic) & 169 bps expansion in EBIDTA margins leading to a
49% increase in recurring PAT. Reported PAT was buoyed by forex translation gains (Rs289m). CRAMS was the key growth driver while the legacy industrial and performance products business benefited from lower molasses prices.

Citi raised FY08E, FY09E and FY10E net profit estimates by 41%, 5% and 3% respectively. The company is expected to report an EPS of Rs 17.37, 22.11 and 27.00 for FY08, 09 and 10 respectively. Citi also raised the stock target price by 8% to Rs 415/share.

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