Jefferies initiates coverage on JB Pharma with a 'buy' tag; stock hits 52-week high

JB Chemicals had a decent run in the last year, rising nearly 62%, while it has delivered 20% returns to investors so far this year.

"JB Chemicals is the fastest growing domestic pharma company with therapy dominance in cardiac and gastro. Life cycle management of key brands, synergistic acquisitions, and targeted new launches should allow JB to outperform industry growth," Jefferies said.

The brokerage has given a target of Rs 2,680, based on 20x June-25 EV-EBITDA. The valuation assigned is at a 15% premium to its peer Torrent Pharma, mainly due to superior EBITDA growth and ROIC profile.


JB Pharma is one of the fastest-growing pharmaceutical companies in India and a leading player in the hypertension segment. Besides its strong India presence, which accounts for the majority of its revenue, its other two home markets are Russia and South Africa.

The company's India business is focused on a four-pronged strategy on therapies of cardiac (44%), gastro (30%), antibiotics (10%), and gynae (5%).
In India, the company has six brands among the top 300 IPM brands in the country. The company exports its finished formulations to over 40 countries, including the US.

The export growth will be led by contract manufacturing of Lozenges where it has strong customer relationships and technology," Jefferies said.

Over the next three years, the brokerage estimates JB Pharma to witness 12/17%/20% growth in revenue/EBITDA/PAT CAGR, and its ROIC is expected to expand by 700 bps to 30%.

Meanwhile, JB Pharma's India revenue is estimated to grow at 13% CAGR to Rs 2,370 crore over FY23-26E, which is 3% ahead of industry growth.

"JB should emerge amongst the fastest growing mid-sized companies due to its India and CMO focus," it said.

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