JB Chemicals Guides For 25-27% Ebidta Margin In FY25
The company aims to increase the share of chronic segment in their portfolio from 52% to 60%, with the help of existing and niche products that it has acquired.
JB Chemicals and Pharmaceuticals Ltd.'s has guided for margin in the range of 25-27% in FY25, despite cost pressure from the Red Sea crisis.
The company has reported peak margin in the operating side of the business, making it their best performing quarter in the last three years, Chief Executive Officer Nikhil Chopra told NDTV Profit.
JB Pharma Q3 Earnings FY24 (Consolidated, YoY)
Revenue up 6.53% at Rs 844.51 crore vs Rs 792.71 crore (Bloomberg estimate: Rs 860.43 crore).
Ebitda up 27.66% at Rs 223.12 crore vs Rs 174.77 crore (Bloomberg estimate: Rs 213.40 crore).
Margin expands 437 bps at 26.42% vs 22.04% (Bloomberg estimate: 24.80%).
Net profit up 25.89% at Rs 133.57 crore vs Rs 106.1 crore (Bloomberg estimate: Rs 133.70 crore).
For FY25, the guidance is in the range of 25-27% because the input prices have gone up due to the Red Sea conflict, and the impact could be felt then, in addition to delays in shipping which could bear an impact on the overall margin, he said.
India Business Outlook
Growth in the India business, which came in at 14% in Q3, was led by the chronic segment, said Chopra.
The company aims to increase the share of chronic segment in their portfolio from 52% to 60%, with the help of existing and niche products that it has acquired.
"Chronic, as a business, has better margins and is a refill business since patients have to continue medication," he said.
Share of chronic in the overall Indian pharmaceutical market is at 40% currently.
The company's near-term aim is to be in the top 10, in the prescription segment in India, from the current 16th position.
International Business Outlook
The company had disclosed that revenue growth was impacted by international business. This was majorly due to South Africa business where the company moved away from the public market.
Chopra said that the public market business was of Rs 150 crore and had very thin margins. While the impact of this revenue loss will be felt till Q1 FY25, the "South African business will be Ebidta-accretive next year onwards".
Overall, revenue from South Africa will be Rs 250 crore and the company's strategy in the geography will now be 60% private sector and 40% public sector, which was originally in the reverse ratio.
Other Highlights
Chopra said that they intend to grow the CDMO business from current $50 million to $100 million in the next three to five years. Three growth levers would be new geographies, new partners and diversifying into new categories of lozenges (cough tablets).
On the Red Sea conflict, he said that a couple of active pharmaceutical ingredients are seeing pricing pressure and there is a delay in supply.
On the recently acquired ophthalmology portfolio, Chopra said that they were excited about the opportunity and would wait for the next three months to understand the therapy, which grows at 14% versus the overall India pharma market. They intend to expand the ophthalmic portfolio and increase the footprint across the country.
