JB Chemicals Soars 10% on Strong Q2 Results and Positive Outlook

Manoj Prasad

JB Chemicals & Pharmaceuticals Ltd (JBCHEPHARM) shares surged over 10% to a new all-time high on Friday (22 December, 2023) after the company reported better than expected results for the September 2023 quarter.

Solid Q2 Performance Drives Share Price Rally

JB Chemicals reported a net profit of Rs 150.59 crore in Q2FY23, a growth of 22% over the same quarter last year. Revenue from operations jumped 20% year-on-year to Rs 635 crore.

The strong growth was led by robust volume expansion in the domestic formulations business as well as higher export formulations sales. Operating margin expanded by 260 basis points to 24.2% in Q2 as a result of operating leverage benefits.

Commenting on the results, Nikhil Chopra, CEO and Wholetime Director said, “We have reported highest ever quarterly revenue and profit after tax (PAT) during the second quarter of the current financial year. The growth momentum continued across all our business segments of APIs, formulations and international business.”

This strong operating performance has renewed investor confidence in JB Chemicals’ growth story. The stock hit an intraday high of Rs 1,631 on Friday, representing a gain of over 10% compared to Thursday closing. With a market capitalization of over Rs 23,000 crore, JB Chemicals is among the top pharma companies in India.

JB Chemicals Outperforms Peers

The 10% rise in JB Chemicals shares significantly outpaced gains in peers like IPCA Laboratories (-0.2%), Ajanta Pharma (+3.8%) and the Nifty Pharma index (+2%) on Friday.

Over the past one week, JB Chemicals’ stock price has surged nearly 5% compared to a flat or negative returns for most pharma companies.

This outperformance highlights JB Chemicals strengthening competitive positioning driven by deepening presence across therapies, strong brand equity with doctors and expansion in exports business.

Analysts Overwhelmingly Bullish After Q2 Beat

According to livemint data, JB Chemicals is covered by 10 analysts. Post the September quarter results, analysts have turned overwhelmingly bullish on the stock:

  • 5 analysts have a Strong Buy rating
  • 2 analysts have a Buy rating
  • 2 analysts have a Hold rating
  • 1 analyst has a Sell rating

This indicates significant upside potential in the stock from current levels bases on average analyst targets.

Emkay Global Research noted, “JBCE’s earnings growth trajectory seems exciting, led by 1) recovery in acute therapies, 2) sustained growth momentum in chronic therapies, 3) higher API sales, and 4) benign input prices. It remains one of the best plays in the mid-cap pharma space.”

Robust Q2 Results Affirm Strong Growth Trajectory

The 22% rise in net profit and 20% jump in revenues in Q2FY23 demonstrates that JB Chemicals has embarked on a strong and sustainable growth trajectory driven by:

Domestic formulations: Sales grew 18% year-on-year led by volume growth of 16%. The company outperformed IPM growth across therapies. Market share gains are being driven by field force expansion, launch of new products and growing brand awareness amongst doctors.

Exports formulations: Sales grew 35% in Q2 with growth witnessed across all geographies. JB Chemicals is deepening presence in existing markets while also entering new markets.

API business: API sales increased 30% YoY with growth in exports as well as domestic sales to external customers. Firm API pricing also aided profitability.

Going forward, the company remains focused on gaining market share, leveraging distribution expansion to drive volumes and delivering robust earnings growth. JB Chemicals seem well positioned to continue its stock market outperformance.

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