JB Chemicals Q4 Results Review - In-line Operational Performance; Outlook Remains Strong: Nirmal Bang

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Nirmal Bang ReportJB Chemicals’ (JB Chem) 4QFY23 performance was in-line with NBIE estimates on the operational front, although they missed on the profitability front due to higher-than expected financial cost and amortization related to the acquired brands. Revenue grew by 22.1% YoY to Rs7.6bn on the back of consolidation of inorganic opportunities in India besides robust growth in export formulations and the CMO segment. India Formulations segment grew by 29.3% YoY to Rs3.8bn (NBIE est: Rs4.0bn); organic growth was in low double digit in 4QFY23 and mid-teen in FY23. The CMO segment continued to deliver strong performance, growing by 17.6% YoY, mainly driven by strong demand from customers and new launches. EBITDA margin improved by 146bps YoY to 21.5% on the back of cost optimization initiatives and improved productivity..The company has raised its EBITDA margin guidance (ex-ESOPs) from 24-26% to 25-27%. Net profit grew by 3.3% YoY to Rs876mn in 4QFY23. India+CMO contributed ~65% to overall sales in FY23. The management expects the domestic business to continue to outpace industry growth by 300-400bps and the CMO business to grow in low to mid-teens in FY24. JB Chem remains our preferred pick, mainly underpinned by aggressive growth focus in the domestic market, high return ratios, lean B/S and healthy FCF despite acquisitions. In the domestic market, the company continuous to outpace industry growth with life cycle management of legacy brands and new launches..Also, strong performance from inorganic opportunities is boosting overall domestic growth. Growth in margin-accretive CMO business is also expected to remain strong on the back of geographical expansion, entry into new Chronic segments and addition of new clients. We maintain a BUY recommendation on JB Chem with a revised target price (TP) of Rs2,461, valuing it at 18x FY25E EV/EBITDA..Click on the attachment to read the full report: .DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

JB Chemicals Q4 Results Review - In-line Operational Performance; Outlook Remains Strong: Nirmal Bang

J B Chemicals Q4 Results Review - In-line Operational Performance; Outlook Remains Strong : Nirmal Bang

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