Why is JB Chemicals & Pharmaceuticals doing well?

The Indian pharma industry has caught global investors’ attention in 2020. BSE Healthcare Index is up by more than 47 per cent on a YTD basis and JB Chemicals & Pharmaceuticals (JB Chem) is one of the few pharma companies that managed to outperform the best sectoral index in 2020 so far. JB Chem is up by 132 per cent on a YTD basis.

The company reported a jump in net sales of 17.75 per cent in the latest quarter while the consolidated net profits saw a jump of an impressive 138 per cent. The net profits jumped from Rs. 50.14 crore to Rs. 119.42 crore (QoQ) for JB Chem. The margins showed an improvement to 29.76 per cent from 20.68 per cent on a QoQ basis.

If one studies the pharma sector in India in a little detail, it is easy to notice that Cardiac is the largest therapy with approximately Rs. 183 billion in size, which translates into approximately 13 per cent of the total industry. This segment is expected to grow at 10 per cent CAGR and thus, is a huge opportunity for several Indian pharma companies.

JB Chem is one such pharma player along with the big pharma companies such as Lupin, Glenmark, and Cipla that are expected to gain market share in the Indian cardiac market, and therefore, the stock is in limelight. The volume growth in the Cardiac market is approximately 6 per cent, which is almost double the industry average and that augurs well for JB Chem.

JB Chem is a high beta (1.20) stocks and has jumped by 164 per cent in one year. In one month alone, the stock went up by almost 28 per cent. The number of FII holdings in JB Chem increased from 105 to 133 in the June quarter, showcasing an interest in the stock. The stock is truly a multi-bagger over a 10-year period with the stocks gaining more than 864 per cent over the past decade.