ICICI Securities
JB Chemicals & Pharmaceuticals (Buy)
CMP: ₹424.7
Target: ₹550
Surprising positive move by regulator: We view NPPA’s (National Pharmaceuticals Pricing Authority) notification of one-time price increase to the tune of 50 per cent for select 21 NLEM (National List of Essential Medicines)
Outlook: The key positive about the company is that about 43 per cent of its total revenues and >55 per cent of EBITDA comes from domestic formulations We expect 17.5 per cent PAT CAGR over FY19-FY22 led by strong growth in India and 220 bps margin expansion. RoIC would improve from 17.0 per cent in FY19 to 24.9 per cent in FY22E.
Risks: Slowdown in India growth and escalation of ranitidine impurity issue.