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Nirmal Bang Report
JB Chemicals and Pharmaceuticals Ltd.’s Q1 FY25 results were in line with our estimates. Revenue slightly missed our estimate. Ebitda margin and profit after tax margins were in line with our estimates.
In Q1 FY25, revenue grew by 12% YoY, driven by double-digit growth in domestic formulations, largely supported by the chronic segment and the acquired pediatric and ophthalmology portfolio. There was also some contribution from Razel (Glenmark). Ebitda margin guidance for FY25 has been maintained at 26-28% (excluding ESOPs), with a bias towards the higher end of the range.
Ebitda margin improved by 200 basis points YoY to ~28% on the back of softening raw material prices and a better product mix.
JB Chemicals remains our preferred pick within Pharma, mainly underpinned by aggressive growth focus in the domestic plus custom manufacturing organisation business, high return ratios, lean balance sheet and healthy free cash flow despite acquisitions. In the Domestic market, it continues to outpace IPM growth, with Life Cycle Management of legacy brands and new launches.
Also, strong performance of the acquired businesses is boosting overall domestic growth. Recently, it has entered into the ophthalmology segment with an agreement with Novartis.
Growth in margin-accretive CMO business is also expected to remain strong on the back of geographical expansion and product diversification. We maintain Buy on JB Chemical with a revised target price of Rs 2,246, valuing it at 23 times June-FY26E enterprise value/Ebitda.
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Alkem Labs Q1 Results Review – Margin Gains Offset Revenue Shortfall: Nirmal Bang
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