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    J B Chemicals &

    JBCHEPHARMGood
    Healthcare·5 Feb 2025
    Management Summary

    J B Chemicals delivered a strong Q3 FY25 performance characterized by robust domestic growth and a sharp recovery in the CDMO segment. The company successfully navigated currency headwinds in Russia and softness in the US market through improved product mix and cost efficiencies. Management remains bullish on maintaining high-teen growth in India and mid-teen growth in CDMO over the medium term while guiding for steady operating margins.

    Highlights

    8

    • Revenue grew 14% YoY to ₹963 crores, maintained quarterly run rate

    • Operating EBITDA (ex-ESOP) increased 15% to ₹270 crores with margins at 28.1%

    • Net Profit surged 22% YoY to ₹162 crores

    • Domestic business grew 22% to ₹566 crores, now contributing 60% of total revenue

    • CDMO business reported strong recovery with 33% growth to ₹118 crores

    • Progressive portfolio now accounts for 65% of domestic business, up from 35% four years ago

    • Ophthalmology portfolio showed 28% growth, significantly outperforming market growth of 9%

    • Net cash position stood at ₹516 crores as of December 31, 2024

    What Changed2

    vs Q4 FY25

    Tone shiftStrong → GoodGuidance items5 → 6 (+1)

    Key financials

    Single quarter

    05 metrics
    1. 01Revenue₹963 Cr+14.0%YoY
    2. 02Operating EBITDA₹270 Cr+15%YoY
    3. 03EBITDA Margin28.1%
    4. 04Net Profit₹162 Cr+22%YoY
    5. 05Gross Margin67.1%

    Segment breakdown

    • Domestic Business₹566 Cr58.8%
    • International Operations₹397 Cr41.2%
    Donut· Share of Revenue

    Guidance & targets

    6
    CategoryTargetPriority
    Margin
    Operating EBITDA Margin
    26-28%
    		High
    Margin
    Gross Margin
    66-67%
    		High
    Other
    ESOP Cost
    ₹56 crores
    		High
    Other
    ESOP Cost
    ₹40 crores
    		Medium
    Revenue
    Domestic Business Growth
    Mid-teens
    		Medium
    Revenue
    CDMO Business Growth
    Mid-teens
    		Medium

    Risks & concerns

    4
    RiskSeverity

    Currency Volatility (Ruble)

    MTM Forex impact of ₹4 crore recorded in Q3 due to ruble depreciation. — Management acknowledged

    medium

    US Business Softness

    Revenues declined in the US during the first half, but management claims to be 'inching back' with a strong order book for Q4. — Both downplayed

    low

    API Price Volatility

    Management noted API prices are going up (Dollar touching 87-88) but currently mitigated by inventory build-up. — Management acknowledged

    low

    Areas of Evasion(1)

    • Specific market share comparisons with competitors like Telma.

    Q&A highlights

    3

    “In Quarter 4, we expect another ESOP cost of 16 crore... Russia constant growth, it is around minus 5% versus minus 8%.”

    Provides clarity on non-cash charges impacting EBITDA and the underlying performance of the Russia business excluding currency volatility.

    asked by Rashmi Shetty, Dolat Capital

    2 min read5 chapters

    Detailed Narrative

    01

    Domestic Market Outperformance and Portfolio Shift

    JB Pharma's domestic business grew 22% YoY to ₹566 crores, significantly outpacing the Indian Pharma Market (IPM) growth of 8%. A key driver is the 'progressive portfolio,' which has expanded from 35% to 65% of domestic revenue over the last four years. The company now has 25 brands with revenue exceeding ₹25 crores, compared to only 6 brands in December 2020. Major brands like Cilacar, Nicardia, and Sporlac continue to gain market ranks, supported by a volume growth of 7% in Q3 FY25.

    02

    CDMO Recovery and Global Project Pipeline

    The CDMO segment witnessed a sharp recovery in Q3 with 33% growth to ₹118 crores, following a soft first half. Management is bullish on this segment, guiding for mid-teen growth in the short to medium term. The growth is backed by a strong order book and the advancement of 4-5 large global projects expected to kick in over the next 18-24 months. New partnerships in Europe, including lozenge supply for Krka and Kenvue (Zarbees), are already contributing to traction.

    03

    Ophthalmology Integration Driving Synergies

    The recently acquired Ophthalmology portfolio grew 28% in Q3, far exceeding the market's 9% growth. JB Pharma has expanded its ophthalmologist coverage from 7,000 to approximately 15,000 and deployed a dedicated field force of 120 people. Management expects this portfolio to contribute a 200 bps improvement to overall company EBITDA margins over the next 2-3 years as gross margins in this segment are near 70%.

    04

    Financial Resilience and Cash Position

    Despite a slight dip in gross margins to 67.1% due to the dilutive impact of the Ophthal acquisition, operating EBITDA margins improved to 28.1%. The company is sitting on a strong net cash position of ₹516 crores and expects to end the year with ₹650-655 crores in cash after paying off all loans and a dividend payout of ₹130 crores. Finance costs were significantly reduced from ₹12 crores to ₹3 crores YoY due to gross debt reduction.

    05

    Strategic Focus on Chronic and Cardiology

    JB Pharma continues to deepen its presence in cardiology, particularly in hypertension and heart failure. The company is leveraging its 'renal protective' positioning for Cilnidipine (Cilacar) to gain share from Amlodipine combinations. While the company attempted to enter the metabolic/diabetes space organically with Sitagliptin and Dapagliflozin, management admitted the competition is intense and will now focus on inorganic opportunities or adjacencies in cardiology where they have a stronger DNA.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.