Established in 1976, J.B.Chemicals & Pharmaceuticals Ltd. (JBCPL) is one of India’s fastest growing pharmaceutical companies. An integrated, research-oriented, public listed organisation with a focus on supplying affordable, quality products both in India and International markets, JBCPL is trusted by healthcare professionals globally. Today, JBCPL exports to over 30 countries across the world and earns more than half its revenue from its international business. JBCPL is widely committed to manufacturing a range of innovative specialty products that include various pharmaceutical dosage forms like tablets, injectable (vials, ampoules, and form fill seal), creams & ointments, lozenges, herbal liquids and capsules. JBCPL has its headquarters in India’s financial capital, Mumbai. With a domestic sales force of 1,000 people, 17 internationally approved state of the art manufacturing units, a Research and Development Centre, and subsidiaries abroad, the organisation is continually enhancing value for its shareholders.
Domestic business to grow well:
JB chemicals has concentrated on building only few large brands in the domestic market as against spreading resources across too many small brand. JB chemical's strategy is completely different than other peers. This strategy is known as cluster strategy; where you develop your existing markets with existing products. It has market leading position in three of its four products. These top 4 products comprise around 80-90% of total revenues in India.
Focusing on Key export markets to drive business well:
JB chemical's export markets include US business, Australia, South Africa, Africa, South East Asia and other Gulf countries. As FY19 was an exceptional year for its US business (54% CC growth). So company has decided to focus on other key markets such as Russia and South Africa. JB Chemical operates through its own subsidiary in Russia and South Africa. JB Chemical has also acquired more 5-6 MNC clients for supplying Lozenges. We believe these markets to grow well in future.
API Business continue to grow steadily:
Company has signed a pact with Novartis to supply diclofenic salts in addition to diclofenic sodium. Novartis has made new registration which is subject to approval. We believe this will additionally drive the API business in near term.
Covid-19 would have a limited impact on JB Chemical. As medicines are essential items has they have not been instructed to shut the plants. We believe there would be minimal Impact on JB Chem's export business.
Price: JB CHEM in today session has given the breakout above its previous swing high as shown on daily chart. The stock is well placed above its all its important moving average, 21EMA, 50EMA & 200EMA on daily chart as well as weekly chart. We expect the stock to continue its outperformance in the coming weeks. The stock has bounced from the support level with increased in volume which indicates the strength in the counter. The stock is trading in northward direction on daily chart with still room left for the stock to touch its upper band on the Bollinger Band, which still gives bullish stance, suggesting buying will remain intact with the counter in near term.
Indicator: On the indicator front, the daily RSI has generated a bullish crossover as a long bullish candle stick has been formed which has been supported with above average volumes, all indicating to a positive bias in the counter and re iterating our view on the stock. The Parabolic SAR (Stop & Reverse) is also below the trading price, suggesting northward momentum is likely to remain intact in the counter. . The DMI+ is also pointing upwards and is currently placed around 26.49 levels, whereas ADX trading at 19.66, which shows overall strength is likely to bring in sustained buying from the current levels.
Volume: Price and volume analysis plays an important part in determining overall strength or weakness in the stock. Price and volume pattern are moving in the same direction which reflects the true movements in the stock. JB CHEM stock has seen the profit booking with thin volume, which still shows the movement of this stock, is still on bull side.
Conclusion: Considering all the above data facts, we recommend buying for medium term. The stock has seen decent deliverable quantity to trade quantity on daily basis, which indicates strong hands are accumulating the stock at currents levels, which enhance the confidence over the stock. Traders may go long on the stock around Rs.575 levels keeping a stop loss below Rs.490 for target of Rs.720.