Life cycle management of key brands, synergistic acquisitions and targeted new launches will help JB Chemicals outperform industry growth, according to brokerage firm Jefferies. The brokerage initiated coverage on the stock with a buy rating and a price target of Rs 2,680 per share. The price target implies a potential upside of 15 percent from current levels.

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Jefferies said that JB Chemicals is the fastest growing domestic pharma company therapy dominance in cardiac and gastro. The brokerage added that the company's export growth will be led by contract manufacturing of Lozenges, where it has strong customer relationships and technology.

JB Chemicals is one of the largest manufacturers of lozenges globally, exporting to over 40 countries over the last two decades.

Majority of JB Chemicals' business is through its own intellectual property (IP) and not through toll manufacturing. "With current utilisation at nearly 50 percent, JB Chemicals can take more contracts from existing customers, enter new geographies and launch new products in the immunity, digestion areas," the note said. All of this should allow the company to report a revenue CAGR of 12 percent over financial year 2023-2026.

Over financial year 2023-2026, Jefferies expects Compounded Annual Growth Rate (CAGR) of 12 percent, 17 percent and 20 percent for JB Chemicals' revenue, EBITDA and net profit respectively. It also expects JB Chemicals to emerge amongst the fast growing mid-sized company due to its India and CMO focus.

The brokerage has valued JB Chemicals on an EV/EBITDA basis as its financials have contributions from acquired brands, which inflates the depreciation and amortisation. Jefferies' target EBITDA for JB Chemicals adjusts for the non-cash ESOP charge of Rs 40 crore in financial year 2025.

Shares of JB Chemicals are trading 1.7 percent higher at Rs 2,386.80. The stock made an intraday 52-week high of Rs 2,447.75. Shares have risen nearly 22 percent on a year-to-date basis.