J B Chemicals & Pharmaceuticals - Rs.87.00

Established in 1976, JB Chemicals & Pharmaceuticals Ltd (JBCPL) the flagship company of the Unique Group is engaged in manufacturing a wide range of innovative specialty medicines for the domestic and international markets. Its product portfolio consists of a wide range of pharmaceutical formulations, herbal remedies, diagnostics, generic drugs, bulk drug intermediaries and active pharmaceutical ingredients (APIs). JBCPL has a strong presence in various therapeutic segments that include lifestyle management therapy such as cardio-vascular drugs, dental therapeutics, anti-ulcerants and acute therapy such as pain management and anti-infectives. It exports to more than 50 countries worldwide with a strong presence in Russia, Ukraine and other CIS countries and has successfully increased its presence in USA, Europe and Australia through joint ventures and strategic alliances. Interestingly, JBCPL features in the Forbes global list of Best 100 companies under $1 billion in Asia Pacific and its product Doktor Mom has been voted as the most trusted European brand.

JBCPL has 11 state-of-the-art manufacturing facilities in four locations of Ankleshwar, Belapur, Daman and Panoli. Most of the plants are as per WHO standards as well as conform to GMP guidelines but few of them enjoy approvals from renowned international regulatory agencies like USFDA, EDQM, MHRA (UK), TGA (Australia) etc. Its R&D Centre is located in Thane and Worli in Mumbai. It has recently received ANDA approval on ‘Ciprofloxacin’ and ‘Fluconazole’ (Anti-Fungal) and is awaiting approval on ‘Atenolol’ and two other ANDAs. Currently, it is actively working towards filing ANDA’s in Antihistaminics, NSAIDs and Cardiac and going forward plans to file 4/5 ANDAs every year. For future growth the company has a capex plan of about Rs.65 cr. to set up two new facilities one for Vials and pre-filled syringes and the other for a multipurpose API facility. Moreover, it has created a new SBU called Zephyr to service emerging needs in the neuro-psychiatric Diabetelogy and urology segments. Its R&D division is concentrating to develop NDDS in categories like Antiulcer, Quinolone Antibacterials, Analgesics, Anti-inflammatory, Antifungals, Contrast Media, Vitamins (enzyme cofactor) and antihistamines.

The US$ 24 billion global pharmaceutical outsourcing space is expected to more than double to US$ 53 billion in five years from now, which provides a huge growth potential for Indian pharma companies and JBCPL is all set to tap this opportunity. For FY05, its Sales grew by 20% to Rs.358 cr. whereas as its NP increased by 16% to Rs.59 cr. i.e. an EPS of Rs.7.50. Considering all these factors, JBCPL can end FY06 with Sales of Rs.450 cr. and NP of Rs.70 cr. This works out to an EPS of around Rs.9 on its current equity of Rs.16 cr. and face value of Rs.2. Investors are recommended to buy it at the CMP for 50% return in 12~15 months.