JB Chemicals and Pharmaceuticals Target Price Revised to Rs 2400 by Prabhudas Lilladher

J.B. Chemicals & Pharmaceuticals Posts Flat Q4FY26 Adjusted EBITDA

J.B. Chemicals & Pharmaceuticals (JBCP) has reported a flat year-over-year (YoY) adjusted EBITDA in Q4FY26, impacted by certain one-off expenses as the company initiated post-acquisition integration activities. Despite revenue growth across key segments, including domestic business and Contract Development and Manufacturing Organization (CDMO), remaining subdued during the quarter, the company's performance was impacted by several transitional measures undertaken during the period.

These measures included distribution network optimisation, discontinuation of low-margin trade generics, inventory rationalisation, and changes in credit practices. However, the research report by Prabhudas Lilladher believes that JBCP's growth momentum will continue, driven by several factors such as geographical expansion of legacy brands, improvement in marketing research (MR) productivity, scale up in acquired brands, launch of new products & therapies, scaling up contract manufacturing business, and strong free cash flow (FCF) generation.

The report further expects the company's margins to continue improving beyond FY27E with the grant of a perpetual license for its acquired ophthalmic portfolio. As a result, the FY27E/28E earnings per share (EPS) has been reduced by 1-3%. The research report also expects an EBIDTA compound annual growth rate (CAGR) of 20% over FY26-28E.

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Stock Valuation

At the current market price (CMP), the stock is trading at 28x FY28E EPS. Despite this, Prabhudas Lilladher maintains a 'BUY' rating with a target price of INR 2,400/share, valuing the company at 32x FY28E EPS.