IIFL initiated coverage with a buy call and a target price of Rs 570, implying a 20.6 percent potential upside.
JB Chemicals and Pharmaceuticals share price rallied 2.5 percent intraday to hit a record high of Rs 484.55 on January 17 after IIFL initiated coverage with a buy call and a target price of Rs 570, implying a 20.6 percent potential upside from current levels.
The company derives a large portion of its profit (50-55 percent of EBITDA) from India formulations, hence it has low dependence on US market for growth, the brokerage said.
The focus on brand building aided JB Chemicals to outperform Indian pharmaceutical market (IPM) growth by 350-400 bps per annum, said the research firm, which expects India business outperformance to sustain with mid-teens growth.
IIFL forecasts EPS CAGR of 21 percent over FY19-22.
The positive stance underpinned further by company's strong net cash balance sheet with low capex, healthy free cash flow (yield 6 percent) and regular share buybacks, the brokerage said.
The stock has rallied 50 percent in the last one year. It was quoting at Rs 476.90, up Rs 4.30, or 0.91 percent, on BSE at 1445 hours.Disclaimer: The report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.