I-Sec upgrades J B Chemicals to add, lowers target price to Rs 1,815

ICICI Securities has upgraded J B Chemicals & Pharmaceuticals to ADD (from HOLD earlier) with a target price of Rs 1815 (earlier: Rs 1,870). The current market price of J B Chemicals & Pharmaceuticals is Rs 1676.05.
J B Chemicals, incorporated in 1976, is a Mid Cap company with a market cap of Rs 25962.64 crore, operating in the Pharmaceuticals sector.

J B Chemicals & Pharmaceuticals' key products/revenue Segments include Pharmaceuticals, Other Operating Revenue, Export Incentives, Sale of services and Scrap for the year ending 31-Mar-2023.


Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 971.49 crore, down -3.87% from last quarter Total Income of Rs 1010.57 crore and up 14.04% from last year same quarter Total Income of Rs 851.86 crore. The company has reported net profit after tax of Rs 162.49 crore in the latest quarter.

The company's top management includes Mr.Arun Duggal, Mr.Nikhil Chopra, Mr.Prashant Kumar, Mr.Gaurav Trehan, Mr.Akshay Tanna, Mr.Sumit Bose, Ms.Padmini Khare Kaicker. Company has D N V & Co. as its auditors. As on 31-12-2024, the company has a total of 16 Crore shares outstanding.

Investment Rationale
ICICI Securities expects JB Chem to register an earnings CAGR of 18.5% over FY24-27E driven by revenue CAGR of 11.7% and 230bps improvement in EBITDA margin (between 26- 28% ex-ESOP). RoE/RoCE could climb to 21.6%/19.2%, respectively, in FY26E. The brokerage has cut EBITDA by 3?4% for FY25-26E to factor in the slowdown in exports. The stock trades at 21.2x FY26E and 18.2x FY27E EV/ EBITDA. They value the company using EV/EBITDA due to the increased amortisation charge on account of acquisitions. I-Sec upgrades its rating to ADD (earlier Hold) with a lower target price of Rs 1,815 (Rs 1,870 earlier), based on 24x FY26E EV/EBITDA (unchanged). Key downside risks are slowdown in exports, more products under price control and currency volatility.

Promoter/FII Holdings
Promoters held 53.66 per cent stake in the company as of 31-Dec-2024, while FIIs owned 14.64 per cent, DIIs 16.4 per cent.