J B Chemicals & Pharmaceuticals Ltd. share price target

JB Chemical’s (JB Chem) Q4FY24 EBITDA and profits were below our expectation. Q4 sales benefitted from the distribution agreement for its ophthalmology brands with Novartis, partially offset by the discontinuation of the tender business in South Africa.

JB Chemicals & Pharmaceuticals’ (JBCPL) Q2FY24 revenue growth of 8.9% was impacted by discontinuation of low margin tender business in South Africa (annual hit of INR 1.2bn) and slowdown in acute therapies. However, traction in chronic therapies (up 14%) and CMO business helped it deliver better than (our) expected margins and PAT.

JB Chemicals & Pharmaceuticals’ (JBCPL) Q4FY23 performance was below our expectations due to seasonality in base portfolio of India and M&A-led surge in cost. M&A in India and capacity addition for CMO have lifted sales contribution of these margin-lucrative segments to 65% (55% in FY20).

JB Chemicals & Pharmaceuticals (JBCPL) Q3FY23 performance was broadly in line with our estimates, driven by robust growth across the segments. Consolidated revenue grew 32% YoY to Rs7.9bn (I-Sec: 7.7bn) driven by acquisitions in India.

JB Chemicals & Pharmaceuticals (JBCPL) has reported a strong Q2FY23 performance, broadly in line with our estimates, driven by robust growth in both domestic and CMO segments.

JB Chemicals & Pharmaceuticals (JBCPL) has reported a strong Q1FY23 performance, well ahead of our estimates, driven by robust growth in both domestic and CMO segments.

JB Chemicals & Pharmaceuticals’ (JBCPL) Q3FY22 performance was better than our estimates on operational fronts. Excluding revenue deferred to Q3FY21 from Q2FY21, consolidated revenue grew 23% YoY to Rs6bn (I-Sec est: 5.8bn). EBITDA margin stood at 21.3%, higher than our estimate of 19.8%.

JB Chemicals & Pharmaceuticals’ (JBCPL) Q2FY22 performance was better than estimates driven by strong growth in India business. EBITDA margin was lower than estimates owing to ESOPs charge. Consolidated revenue grew 33.7% YoY to Rs5.9bn and EBITDA margin dropped 340bps to 21.4%.

J.B. Chemicals & Pharmaceuticals Ltd (JBCP) is one of the fastest growing company in the IPM on the back of its brand and therapy focused strategy. Its strong domestic franchisee (>85% sales from 5 mega brands: Cilacar & Nicardia in Cardiac and Metrogyl & Rantac in Gastro-Intestinal) enjoy enormous brand equity which allows them to earn >35% EBITDA margins. While unwinding of erst-while promoter's transactions provide a permanent shift in base, EBITDA margins likely to be supported at the current levels on account to productivity improvements and renewed focus on CMO, US generics and Russia business. We valued JBCP using SOTP based methodology; valuing Domestic franchisee at 7x FY23E EV/Sales and Exports business at 4x FY23E EV/Sales given their inherent quality. We thus initiate coverage on JBCP with BUY rating and target price of INR 2,000 which is ~33% upside on CMP. At our target price, JBCP is available at 26x FY23E PER; on the CMP JBCP trades at 20x FY23E PER....

Company has been ranked 28th in the IPM, has increased its position by 4 ranks in the last 12 months JB Domestic branded generic growth has outpaced the market by ~500bp/yr...