JB Chemicals & Pharma - On M&A Spree To Diversify India Base: ICICI Securities

ICICI Securities Report

JB Chemicals and Pharmaceuticals Ltd. is licensing ophthalmic brands from Novartis, marking its foray in this therapy. It will make a cumulative payment of Rs 10.89 billion for in-licensing the 10 brands of Novartis for three years, post which it will get a perpetual license for those brands. Key acquired brands like Vigamax, Nevanac, Travatan are the market leaders in molecule category.

As per IQVIA, sales from these 10 brands have registered a compound annual growth rate of 8% in the last two years. Management aims to grow the acquired portfolio at 15% in coming years by launching line extensions and adding 30- 40 MRs. We raise our FY25E earnings by 1% to factor in the impact of this deal.

We maintain our 'Hold' rating on the stock but raise target price to Rs 1,595, valuing the company at 20 times FY26E enterprise /Ebitda (earlier 20 times FY25E).

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