Jenburkt Pharma Ltd - Research Report

 

Private Client Research

Rating

Buy

Sector

Healthcare

Company

Jenburkt Pharma Ltd

Reco Price
Rs. 297
Price Target (12 Months)
Rs. 529
Upside
78.11%

Date

22 October 2014
Sensex
26787.23
CNX Nifty
7995.9

Exchange

Code

NSE
-
BSE
524731

Strengthening the brands in respective segments will drive future growth.

Strong Domestic Operations:
Jenburkt Pharma has a strong committed team of more than 575 sales force across India, Jenburkt promotes all its 85 brands ethically across 75,000 doctors and 50,000 chemists regularly. Backing the strong force company has more than 1000 stockists and 25 superstockists. Jenburkt also caters to large Government, Semi-Government Institutions, Missionary Hospitals, Public Sector Enterprises, etc.

Growing International Exports:
Currently, Jenburkt's products are being exported to 15 countries globally with a clear focus to expand on a yearly basis. Also Jenburkt is open to partnering foreign pharmaceutical firms to market their pharmaceutical products in India; Company is also in search of a capable partner to market their pharmaceutical products across the globe through which they can improve on their exports sales which constitutes small proportion of total sales.

Strengthening the Brand:
Company is focused on strengthening their brands in their respective segments during the last year. There is a growing trend of competition from regional companies who operate either in a few districts or in a few states in India. This is apart from the competition from large organizations operating in India. Neuropathy detection camps and bone densitometry camps were carried out in various parts of the country for detection of neuropathy and osteoporosis.. The strategy of Company is to focus on long term therapies in acute and chronic ailments, by moving up the value chain continuously. As a result, a few of the Company’s brands are the preferred choice in certain segments. Company has some strong brand like CARTI SAFE FORTE (Anti Arithritic) , POWERGESIC Tablets (Anti Inflammory Analogesic).They rank among the top five in those segments.

Quality Portfolio of Products:
Jenburkt has good health through quality products that include prescription and over-the-counter drugs. Their prescription medicines span across various therapeutic areas such as anti-arthritic, antimalarials, anti-osteoporotic, antibiotics, antidiabetics and anti-inflammatory drugs and more. Hence Company has good quality of products in their portfolio.

Strong Manufacturing Facilities:
Company has the state-of-the-art manufacturing plant at Sihor-Gujarat, in India. The plant is modern and well-equipped with spacious operational areas having adequate capacities for manufacturing world-class pharmaceutical and healthcare products. Company’s plant is approved as per W.H.O Guidelines with current G.M.P requirements, apart from approvals from various countries. Furthering the development of formulations, Jenburkt has a Research & Development unit duly approved by the Ministry of Science & Technology, Government of India. Hence company has strong manufacturing facilities to cater both domestic and international market. Also Jenburkt has a progressive lineage of manufacturing high quality formulations backed by a strong Research & Development, Regulatory and global marketing team. The big thrust of Jenburkt's strategy is to focus on creating a new category in the Indian and the International pharmaceutical market vis a vis.

Recent R&D Activities:
Recently company undertook commercial scale manufacturing of Frendacid, an antacid and antiflatulance for export market. Also Company continue to work towards formulating new and existing molecules for domestic and international market for efficient and cost saving drug delivery systems. Hence company is in continuous process of improving on its product portfolio.

Strong Financials:
Last year company posted strong gross profit margins of above 67%, EBITDA margin above 15%, PAT margins near 10% which are excellent numbers for mid cap pharma companies. With no further capex required in next few years company can post 200 crore of sales in next three years. Also employee cost which is 23% of total sales as on date is expected to reduce going forward as recent capex will take place for execution hence margins will be increased gradually in next few years. Company also pays regular dividend every year which help them to maintain strong dividend yield of above 4%. Company is debt free company with 16.75 crores of cash in hand.

Stock Data

CMP (Rs)
297
Face value (Rs)
10
52 Week Range (Rs)
335 - 68.10
Market cap (Rs Crores)
134.35
Price To Book Value (x)
4.80
P/E Ratio (x)
18.39
EV/EBIDTA (x)
10.61

One Year indexed Stock Performance

Jenburkt Pharma LtdSensex
Jenburkt Pharma Ltd
Performance (%)
1m
6m
12m
Absolute
5.49
214.89
324.29
Sensex
-1.54
17.70
28.38

Shareholders

(in %)
30-Sep
Promoter
46.95
FII
0
DII
0
Others
53.05
Total
100

+91 22 6639 3000
research@stockaxis.com

 

Industry

The Indian Pharmaceutical Industry is highly fragmented and grown across India, under two segments, the organised and the unorganised. SMEs are at the core of the growth of the industry. These SMEs are taking advantage of the demand of high quality products in India and in the global market. Hence, the Indian Government has also provided a boost to the SMEs. Noticeable progress is seen in clinical trials and innovations in the pharmaceutical industry.

The Indian Pharmaceutical Industry is poised to escalate its growth, mainly due to the potentially huge demand for innovative and world class quality drugs in India and in the overseas market, even though pricing plays a vital role for Companies in the industry. The growth in the industry is mainly driven by contract manufacturing and backward integration, resulting in quality control and reduction in cost.

Profile

Jenburkt Pharmaceuticals Ltd, a venture to diversify into the healthcare and pharmaceutical industry, was formed in 1985 by the Bhuta family; late Hemendra N. Bhuta was the promoter of the company while the Bhuta Group was founded by Nandlal Mulji Bhuta Jenburkt is engaged in manufacturing and marketing of speciality and high quality pharmaceutical formulations and healthcare products. Jenburkt is a public limited company, with its stock listed on the Bombay Stock Exchange. Jenburkt's headquarters are located in Mumbai, from where it’s entire operations.

Profit & Loss Statement:- (Standalone)
(Rs Crores)
Particulars
Mar-12
Mar-13
Mar-14
Mar-15E
Mar-16E
Income:-
  • Gross Sales
  • Less: Excise Duty
  • Net Sales
  • Growth (%)
  • Total Expenditure
  • EBIDTA
  • EBIDTA Margin (%)
  • Other Income
  • Operating Profit
  • Interest
  • PBDT
  • Depreciation
  • Profit Before Taxation
  • Exceptional Income / Expenses
  • Profit Before Tax
  • Provision for Tax
  • Profit After Tax
  • Adjusted EPS
  • 61.02
  • 1.20
  • 59.82
  • -
  • 50.35
  • 9.47
  • 15.83
  • 0.82
  • 10.29
  • 0.63
  • 9.66
  • 1.22
  • 8.44
  • 0.08
  • 8.52
  • 2.53
  • 6.00
  • 12.89
  • 70.73
  • 1.38
  • 69.34
  • 15.92
  • 59.23
  • 10.11
  • 14.58
  • 1.12
  • 11.23
  • 0.94
  • 10.29
  • 1.48
  • 8.81
  • 0.01
  • 8.82
  • 2.61
  • 6.22
  • 13.37
  • 76.2
  • 0
  • 76.23
  • 9.93
  • 64.71
  • 11.52
  • 15.11
  • 1.61
  • 13.13
  • 1.27
  • 11.86
  • 1.55
  • 10.31
  • 0
  • 10.31
  • 2.82
  • 7.49
  • 16.15
  • 87.85
  • 3.07
  • 84.78
  • 11.21
  • 73.5
  • 14.35
  • 16.93
  • 1.85
  • 16.20
  • 1.35
  • 14.85
  • 1.62
  • 13.23M
  • 0
  • 13.23
  • 3.62
  • 9.61
  • 20.72
  • 98.5
  • 3.45
  • 95.05
  • 12.12
  • 80.5
  • 18.00
  • 18.94
  • 1.92
  • 19.92
  • 1.35
  • 18.57
  • 1.68
  • 16.89
  • 0
  • 16.89
  • 4.62
  • 12.27
  • 26.46
Source: Stockaxis Research, Company Data

Valuation

Considering the strong product portfolio and stable financials company is trading at very low valuation.At CMP of Rs 296 stock is trading at 11.22x which is very low valuation for a mid cap pharma company. We assign the target price of Rs 529 where stock trades at 20x which is a fair valuation for company in long term.

 

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