Broker’s call: JB Chemicals & Pharma (Add)

Target: ₹1,720

CMP: ₹1,550.75

We hosted investors for a visit to JB Chemicals’ Daman lozenges facility to better understand the outlook.

Key takeaways include: Geographical expansion with same customer, tech transfer for customer owned product and owned product push are three main levers of growth, companies want to do quick marketing and not earlier practice of filing of own dossiers which is leading to quicker but durable demand and Overall 50 per cent by volume is JB Chem IP ( and rest is customer who has brought in the tech transfer or products.

Growth of top 5 customers has doubled in volumes with 70 per cent share of top 5 customers, switching takes at least 2-3 years which explains lack of client churn since inception, many of the products currently sold in India would not be feasible in JB Chemicals facility given the multiple regulatory approvals garnered by the facility and return on capital invested would never be commensurate with scale achievable in the near term and it is always a long term business.

Key learning was while lozenges business does not have manufacturing complexity, primary barrier is the relationship built with customers over 2 decades and would be difficult to disrupt. Overall, JB Chem should report margin impact in Q4 due to payment for acquired ophthalmology portfolio even as rebound in acute season is eyed from Q1 FY25.