Prabhudas Lilladher Bets on JB Chemicals, Sets Rs 2300 Target

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AuthorAarav Shah|Published at:
Prabhudas Lilladher Bets on JB Chemicals, Sets Rs 2300 Target
Overview

Prabhudas Lilladher issued a 'BUY' recommendation for JB Chemicals and Pharmaceuticals, assigning a Rs 2,300 price target. The brokerage highlighted a robust 16% year-over-year increase in adjusted EBITDA for Q3FY26, projecting a significant 22% Compound Annual Growth Rate for Earnings Per Share through fiscal 2028.

Prabhudas Lilladher has initiated a 'BUY' rating on JB Chemicals and Pharmaceuticals, setting a price objective of Rs 2,300 per share. The firm’s research highlights the company's strong operational performance, noting a 16% year-over-year increase in adjusted EBITDA for the third quarter of fiscal year 2026, a figure that met expectations.

The brokerage foresees continued growth momentum driven by several strategic initiatives. These include the geographical expansion of established brands, enhancements in sales representative productivity, scaling up of recently acquired product portfolios, and the introduction of new therapies and products. Furthermore, the contract manufacturing segment is also slated for expansion, alongside strong Free Cash Flow generation.

Margin Outlook

Margins are anticipated to strengthen beyond fiscal year 2027, benefiting from the perpetual license grant for an acquired ophthalmic product portfolio. The integration of the acquisition from Torrent Pharma is progressing, with management indicating transaction closure by the end of Q4FY26, followed by a merger completion period of six to nine months. Prabhudas Lilladher has marginally adjusted its Earnings Per Share (EPS) estimates for FY27E and FY28E downwards by 2-3%, while still expecting an EPS Compound Annual Growth Rate of approximately 22% from FY25 to FY28.

Valuation

At its current market price, JB Chemicals and Pharmaceuticals is trading at 25 times its estimated FY28 earnings. The 'BUY' recommendation and Rs 2,300 target price are based on a valuation of 30 times the projected FY28E EPS, indicating a belief in sustained growth and operational efficiency.

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