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CD Equisearch
JB Chemicals (Accumulate)
CMP: ₹327.95
Target: ₹386
Indian pharmaceutical sector accounts for about 2.4 per cent of the global pharmaceutical industry in value terms and 10 per cent in volume terms. The Indian pharmaceuticals market increased at a CAGR of 17.89 per cent during 2005-16 with the market increasing to $36.7 billion in 2016 from $6 billion in 2005, and is expected to expand at a CAGR of 15.92 per cent to $55 billion by 2020.
JB Chemicals & Pharmaceutical’s continuous focus on harnessing potential of existing products, launching of new line extensions and achieving of new line productivity will be pursued with scientific product promotions and aggressive marketing strategies. The stringent initiatives taken have resulted in rationalisation of inventory position and release of cash for growth. The market has been plagued by high depreciation of Russian and Ukrainian currency against dollar due to steep fall in oil prices. In addition, the same impact has been seen in all the other CIS markets.
Undoubtedly, the business faces challenges such as increasing span of price control, intense competition, increasing regulatory requirement and growing input costs, to name a few. Taking into consideration of all these, we revise our rating to ‘Accumulate’.
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