Buy Midcap Pharma Stock, Gave Over 600% Return In 5 Yrs, Declares 462.50% Dividend, 1:2 Stock Split

Leading brokerage firm Prabhudas Lilladher initiated coverage on J.B. Chemicals & Pharmaceuticals Ltd. (JBCP) with a positive outlook, recommending a "Buy" for a target price of Rs 2,450/share. According to the given target price, the stock is likely to give a decent return of 19% if purchased at the current market price. JBCP is midcap stock operating in the pharma sector. It has a market capitalisation of Rs. 15,972.67 crore.

The Board of Directors of JBCPL in a meeting held on May 24, 2023, recommended a final dividend of Rs 9.25/share i.e. 462.50%. In addition, the Board also considered and approved sub-divison/split of the existing equity shares.

Recommended Dividend

"Recommended a final dividend of Rs. 9.25 (462.50 %) per equity share of face value of Rs. 2 for the year 2022-23. The dividend, if declared, will be remitted/ dividend warrants will be dispatched on or after 10 days from date of Annual General Meeting," the company said in an exchange filing.

Sub-division/Split

The Board considered and approved sub-division/split of existing equity shares of face value Rs. 2/- each of the Company to equity shares of face value Re. 1/- each of the Company, subject to regulatory/statutory approvals as may be required and the approval of the shareholders of the Company," the company said in an exchange filing.

In-line quarter; gross margin surprise positively, Buy for TP of Rs 2,450

According to Prabhudas Lilladher, J.B. Chemicals & Pharmaceuticals (JBCP) Q4FY23 EBITDA growth of 31% YoY was broadly in-line with our estimates, aided by strong revenue growth across domestic formulation (+29% YoY) and contract manufacturing business (+18% YoY) along with higher GMs.

"We believe JBCP will continue with its growth momentum driven by 1) geographical expansion of legacy brands 2) improvement in MR productivity 3) scale up in Sanzyme, Azmarda and Razel franchise 4) launch of new products & therapies 5) scaling up contract manufacturing business and 6) improvement in FCF generation. Over FY23-25E we expect EPS CAGR of 31%," the brokerage has said.

It added, "At CMP, the stock is trading at 21x FY25E P/E adjusted for ESOP and amortization charges. We maintain our 'BUY' rating with revised TP of Rs2,450/share (Rs2,350 earlier) as we roll forward, valuing at 25x FY25E EPS adjusted for ESOP and amortization charges."

Stock Outlook

The last traded share price of JBCPL is Rs. 2,064.25/share on NSE. Its 52 week high as on 17 April 2023 is Rs. 2,223.90/share and 52 week low as on 16 June 2022 is Rs. 1,342.20/share, respectively. The stock jumped 3.77% in 1 week. It gave 31.95% positive return in the last 1 year, and 210.9% in the last 3 years, respectively. It has given 603.92% positive return in 5 years.

Disclaimer - The stock has been picked from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.