Jenburkt Pharmaceuticals Ltd - Research Report

 

Private Client Research

Rating

Buy

Sector

Pharmaceuticals & Drugs

Company

Jenburkt Pharmaceuticals Ltd

Reco Price
Rs. 477.00
Price Target (1.5 - 2 Years)
Rs. 952.00
Upside
99.58%

Date

June 08, 2017
Sensex
31213.36
CNX Nifty
9647.25

Exchange

Code

NSE
-
BSE
524731

Strengthening the company’s brands will drive future growth.

Strong Domestic Operations:
Jenburkt Pharma Ltd., engaged in manufacturing and marketing of speciality and high quality pharmaceutical formulations and healthcare products, has a strong committed sales force team spread across India. Jenburkt promotes all its 85 brands ethically across 75,000 doctors and 50,000 chemists regularly. Backing the strong sales force, the company has more than 1,000 stockists and 25 super-stockists. Jenburkt also caters to large Government and Semi-Government Institutions, Missionary Hospitals, Public Sector Enterprises, etc.

Strengthening the Company’s Brands:
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. In order to tackle competition, during the previous year, the company focussed on strengthening its brands in their respective segments. Additionally, 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 the 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. The company has some strong brands including CARTI SAFE FORTE (Anti Arthritic), POWERGESIC Tablets (Anti Inflammatory Analgesic). It ranks among the top five in these segments.

Quality Products’ Portfolio:
Jenburkt has a strong portfolio of quality products that include prescription and over-the-counter drugs. The company’s prescription medicines span across various therapeutic areas such as anti-arthritic, anti-malarials, anti-osteoporotic, antibiotics, anti-diabetics, anti-inflammatory drugs and more.

Strong Manufacturing Facilities:
Jenburkt has strong manufacturing facilities to cater to both the domestic and international markets. The company has a 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. The company’s plant is approved as per W.H.O. (World Health Organization) guidelines and has 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. Jenburkt also manufactures high quality formulations backed by strong Research & Development which adheres to regulations and is marketed by its global marketing team. Jenburkt's strategy is to focus on creating a new category in the Indian and the International pharmaceutical market.

Strong R&D Activities:
Through Research & Development, the company is in the continuous process of improving on its product portfolio. Recently, the company undertook commercial scale manufacturing of Frendacid, an antacid and anti-flatulence drug for the export market. The company also continues to work towards formulating new and existing molecules for the domestic and international markets for efficient and cost saving drug delivery systems.

Growing Export Market:
Currently, Jenburkt's products are being exported to 15 countries globally with a clear focus to expand on a yearly basis. The company is also scouting for a capable partner to market its pharmaceutical products across the globe in order to increase its export sales which presently constitutes a modest proportion of total sales. Also Jenburkt is open to partnering with foreign pharmaceutical firms to market their pharmaceutical products in India.

Resolved export oriented issues:
The company’s export sales presently contribute 14% of the total sales. Jenburkt faced some challenges with some of its export markets, particularly Sri Lanka, which contributes to around 6% of sales where a leading distributor in the country was facing financial instability and top management attrition. To overcome this issue, Jenburkt appointed a new distributor which impacted 4 months of sales thereby affecting its lucrative export business margins.

Apart from Sri Lanka, the company faced challenges in Benin (Africa) too where due to political uncertainty, distributors were not accepting orders. However, these issues have been resolved and exports have resumed.

Stock Data

CMP (Rs)
540.70
Face value (Rs)
10
52 Week Range (Rs)
572.50 - 340.10
Market cap (Rs Crores)
251.39
Price To Book Value (x)
4.57
P/E Ratio (x)
18.20
EV/EBIDTA (x)
9.81

One Year indexed Stock Performance

Jenburkt Pharmaceuticals LtdSensex
Jenburkt Pharmaceuticals Ltd
Return (%)
1m
3m
12m
36m
Absolute
20.18
1.07
37.99
320.61
Sensex
4.30
16.93
15.52
22.02

Shareholders

(in %)
31-Mar
Promoter
45.81
Public
54.19
Others
0.00
Total
100

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research@stockaxis.com

 

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; however, 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.

The industry is highly fragmented and spread across the country. It can be broadly categorized into the organised and the unorganised segments. SMEs are at the core of the growth of the industry. SMEs are taking advantage of the demand of high quality products in India and in the global market and new markets opening with respect to clinical trials and innovations.

About the Company

Jenburkt Pharmaceuticals Ltd, a player in 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. Headquartered in Mumbai, Jenburkt is engaged in the manufacture 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.

Profit & Loss Statement:- (Standalone)
(Rs Crores)
Particulars
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18E
Mar-19E
Income:-
  • Net Sales
  • Growth (%)
  • Total Expenditure
  • EBITDA
  • % Margin
  • Other Income
  • Operating Profit
  • Interest
  • PBDT
  • Depreciation
  • Profit Before Taxation & Exceptional Items
  • Exceptional Income / Expenses
  • Tax
  • Profit After Tax
  • Adjusted EPS
  • 76.22
  • -
  • 64.71
  • 11.52
  • 15.11
  • 1.61
  • 13.13
  • 1.27
  • 11.86
  • 1.55
  • 10.31
  • 0.02
  • 2.82
  • 7.51
  • 16.15
  • 85.21
  • 11.79
  • 69.96
  • 15.25
  • 17.90
  • 2.07
  • 17.33
  • 0.36
  • 16.97
  • 2.66
  • 14.31
  • 0.03
  • 4.69
  • 9.65
  • 20.75
  • 93.59
  • 9.83
  • 77.13
  • 16.46
  • 17.59
  • 2.73
  • 19.19
  • 0.38
  • 18.81
  • 1.99
  • 16.82
  • 0.01
  • 6.05
  • 10.78
  • 23.18
  • 103.31
  • 10.39
  • 83.57
  • 19.74
  • 19.11
  • 2.76
  • 22.50
  • 0.41
  • 22.09
  • 1.79
  • 20.30
  • 0.13
  • 6.97
  • 13.46
  • 28.96
  • 118.81
  • 15.00
  • 95.05
  • 23.76
  • 20.00
  • 2.75
  • 26.51
  • 0.40
  • 26.11
  • 1.75
  • 24.36
  • 0.00
  • 8.53
  • 15.83
  • 34.07
  • 136.63
  • 15.00
  • 109.30
  • 27.33
  • 20.00
  • 2.75
  • 30.08
  • 0.39
  • 29.69
  • 1.70
  • 27.99
  • 0.00
  • 9.79
  • 18.19
  • 39.14
Source: Stockaxis Research, Company Data

Valuation

The company's strong product portfolio and deeper penetration in international market will lead to next phase of growth.

We Initiate ‘BUY’ on attractive valuations with Target Price of Rs 952 based on 24.32x FY19E EPS. The stock trades at 14.00x FY18E and 12.20x FY19E EPS.

 

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