JB Chemicals & Pharma Q3 2022 Concall Highlights

  • They were the fastest growing company among the Top 30 companies in the domestic formulations market as per IQVIA. JB grew at 27% vs market growth of 18%.
  • Revenues for the quarter stood at ₹601 Cr (10% growth YoY). EBITDA excluding ESOP cost stood at ₹153 Cr (10.5% decline YoY). Gross margins for the quarter stood at 66% although there was significant cost inflation.
  • Cost pressure persists on raw material and packing material, which is expected to continue in the medium-term.
  • During Q3 FY22, Domestic Formulations business launched 12 new products including Molnupiravir, Cilacar TM, Azovas-T and Pirfenidone.
  • The Sanzyme acquisition is expected to add cross leveraging opportunities as many of the markets where Sanzyme has negligible presence like West Bengal, Bihar, etc, is where JB chemicals is a very strong player. 
  • They expect to jump 2 ranks in IQVIA rankings as they start reporting combined numbers. The Domestic Formulation business will contribute to more than half of the revenues when they start reporting combined numbers.
  • As COVID normalizes, they are seeing increased demand in the CMO business for lozenges. 
  • They are very positive about their performance in the export markets in the coming quarters because the contract manufacturing business is seeing a strong revival and they are seeing very strong momentum in Russia and South Africa markets.
  • They have signed a new partner for the lozenges business. They are working on novel concepts for lozenges like melatonin, immunity+cough and cold, etc.
  • They have a lot of support for their brands from nephrologists. They have a special team for the nephrology products and are trying to grow this segment. They have seen good traction with the new products that they have launched. 
  • There has been a significant cost increase in Ranitidine API cost. This has reduced the margins for Rantac – one of their largest brands. They will be looking to take a price hike in this product.
  • They are doing whatever they can to ensure business continuity in Russia as the situation is very volatile there currently. They are putting in a very high level of check mechanisms to ensure collection of receivables. 
  • For the lozenges business, they do not need to invest in additional infrastructure. Their current capacity utilization is at 60% and they have one manufacturing line which can be activated at any time to ramp up production.
  • In the longer term, they want the India business to contribute to 60% of the revenues with a focus on chronic segments.
  • About 30% of their portfolio falls under NLEM. They will be taking a price increase whenever possible.

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