J B Chemicals and Pharmaceuticals Ltd.

About: J B Chemicals and Pharmaceuticals (JBCPL) is one of the fastest growing companies in pharmaceuticals industry. This public listed organization focuses on supplying affordable and quality products in India and International markets. JBPCL is a trusted name among healthcare professional around the world. They are exporting around 30 countries across the world and making half of their revenue internationally. We will analyze to see if JBPCL has the potential to be a Multibagger for 2020 and coming years. For this, we will start from the Balance Sheet of the company.

Financial Health

Balance sheet of JBCPL

As we see, Total share capital and Equity share capital of JBCPL had the total Share Capital of Rs. 16.95 Cr. in 2014 but they bought back their shares in 2018 and now the total share capital is 16.71 Cr. Additionally, they have been constantly working to increase their Reserves which is helping to increase their Net worth and at the same time they have been reducing the loans. This is a sign of a fundamentally strong company and to be an emerging multibagger in upcoming years. That being said, we also need to check, how JBPCL is doing in their business and to figure it out, we will look into the balance sheet of the company.

Proft and Loss of JBPCL

As shown in the Profit and Loss Statement of J B Chemicals and Pharmaceuticals, their Net Sales and Consumption of Raw Materials have been continuously increasing. Their tax is also going low as they have also reduced the loan amount. All this is indicating that investing in JBCPL can be very beneficial for us all. Till this point, we have seen how this company has been performing in the past, now will go into how this company will perform in the future, therefore, we will start the fundamental analysis of JBCPL.

Fundamental Analysis

PE Ratio

The Current PE of JBCPL is 16.48 where in the Industry PE is much higher at 30.17. That tells us that the current Profit to Earning ratio is lower and it’s a good time to invest in the stock of the company.

Forward PE

If we try to calculate 1 year forward PE ratio of JBCPL that we will find the forward PE ratio is 22.34, which is much higher than the current PE of 16.48. This is one more indication for all who wants to make money from this company.

Future of the Stock

Price to Book Value

From the Price to book value analysis with the Return on Equity, we can see that in March’17 PB ratio was 2.12 whereas it decreased to 1.78 and in March’17, Return on Equity was at 7.83 and it jumped to 8.51 in the year March’18. Any company who is succeeding in reducing the PB ratio and increasing the Return on Equity has greatest potential to be a multibagger and we see that indication in this JBCPL.

Evaluation of stock price using PEG Ratio

PEG Ratio

From the above analysis, we can see the Average EPS for 3 years and 5 years is 9.8% and 15.1% respectively, which gives us the future PEG ratio as 1.09. Any company who has which future PEG ratio as 1 is perfect to invest and in this case, the future PEG ratio is almost 1, therefore, we can expect it to be multibagger in future.

Target Price of Jubilant FoodWorks Limited

Target Price

Here, we can see the expected EBITDA for next financial year would be around 249, which is little higher than the current EBITDA i.e. 238 and that makes the forecasted EV as 2687. From all this calculation, we are getting the target price as Rs. 336. As keeping the margin of the safety in mind, the best price to buy this share would be 224 and the current price of the share is higher than our entry price so, the best decision would be to wait and buy it only when you get this share at the best price.

Conclusion

From the all above analysis, we can say that J B Chemicals and Pharmaceuticals is a good company with great fundamental, however, as per the current scenarios, the price of the stock is still higher and being a stock analyst, I would suggest to hold and buy only at the right price.

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