JB Chemicals and Pharmaceuticals Limited Buyback 2019

(i) Established in 1976, J.B.Chemicals & Pharmaceuticals Ltd. (JBCPL) is one of India’s fastest growing pharmaceutical companies. An integrated, research-oriented, public listed organization 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.

(ii) JBCPL is widely committed to manufacturing a range of innovative specialty products that include various pharmaceutical dosage forms like tablets, injectable (vials, ampoules, form fill seal), creams & ointments, lozenges, herbal liquids, and capsules.

(iii) 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 organization is continually enhancing value for its shareholders.

(iv) In India and International markets, JBCPL is also known as Unique Pharmaceutical Laboratories and is a division of JBCPL.

Buy Back Offer Deal:

Buyback Type: Tender Offer
Buyback Record Date: Nov 22 2019
Buyback Opening Date: Dec 16 2019
Buyback Closing Date: Dec 30 2019
Buyback Offer Amount: ₹ 130 cr
Date of Board Meeting approving the proposal: Nov 12 2019
Date of Public Announcement: Nov 12 2019
Buyback Offer Size: 3.68%
Buyback Number of Shares: 29,54,545
Price Type: Tender Offer
FV: 2
Buyback Price: ₹ 440 Per Equity Share

Details of Buyback:

Board of Directors of the Company has, at its meeting held today inter-alia approved Buy-back of up to 29,54,545 fully paid-up Equity Shares of the face value of Rs. 2/- each by the Company (representing 3.68% of the total paid-up equity shares of the Company) at a price of Rs. 440/- (Rupees four hundred forty Only) per Equity Share payable in cash for a total consideration not exceeding Rs.130 crores/- (Rupees one hundred thirty Crores only) (excluding transaction costs) which is 9.33% and 9.38% of the total paid-up equity share capital and free reserves (including securities premium account) as per the audited standalone financial statements and audited consolidated financial statements of the Company for the financial year ended on March 31, 2019, respectively, through the "Tender Offer" route.

Salient financial parameters:

Year Revenue(cr) OPM PAT(cr) NPM EPS
2016 1199.4 24% 179.2 15% 21.09
2017 1244.58 21% 172.96 14% 20.39
2018 1289.99 18% 128 10% 15.24
2019 1501 21% 182 12% 22.15

How to Participate in buyback?

1. Firstly, to be eligible for the buyback the investor should have shares of J.B. Chemicals & Pharmaceuticals Limited BuyBack offer 2019 in demat or physical form as on the record date [22.11.2019]. 2. Once you have shares in demat, you can participate in the buyback process which is opening from [ 16.12.2019 to 30.12.2019 ] by selling your shares through your broker on NSE or BSE. 3. Then on [08.01.2020], the payment will be given to you for accepted shares and unaccepted shares will be returned to your demat account.

Profit from the buyback on the bases of acceptance Ratio:

Buy 454 Shares at CMP of Rs.397 ( 2,00,000/440=454)
Acceptance Ratio 33% 50% 75% 100%
Amount Invested in Buyback 1,80,454 1,80,454 1,80,454 1,80,454
No. of Shares buyback 149 227 340 454
BuyBack Profit 6,407 9,761 14,620 19,522
Profit 3.55% 5.4% 8.1% 10.81%

Recommendation:

Review and Recommendation of JB Chemicals and Pharmaceuticals Limited Buyback 2019 from IZ team is: 4/10 Fair: 1-5 Good: 5-7 Excellent: 7-10 Pros: 1. The company has come up with excellent results. The company has shown a YoY 8% growth in top-line and 86% growth in bottom-line. 2. The EPS for Qtr-2 stands at Rs.11. This makes the current market price very attractive in terms of P/E multiple. 3. The company is debt-free on long-term borrowing. Cons: 1. The size of the buyback is small.

11 Comments

    (i) Revenue at Rs. 456cr for Q2FY20 (+2% QoQ, +5% YoY) and Rs 903cr for H1FY20 (+7% YoY)

    (ii) EBITDA at Rs. 100.3cr* for the quarter(+4% QoQ, +23% YoY) and Rs 196cr for H1FY20

    (iii) EBITDA Margin at 21.97%* for Q2FY20(+45bps QoQ, +325bps YoY) due to cost optimization and 21.7% for H1FY20 (+247bps YOY)

    (iv) PAT at Rs. 93.8cr for Q2FY20 (+51% QoQ, +82% YoY) and Rs. 156cr for H1FY20 (+60.3% YoY)

    (v) EPS at Rs. 11.67* for the quarter (Rs 19.4 for H1FY20)

    Business Highlights

    (i) Domestic business Revenue at Rs. 189cr (vs. IMS 198cr), -1.8% QoQ, +15.7% YoY

    (ii) Domestic Contrast Media sales at Rs. 14.98cr, +11.9% YoY

    (iii) Formulation exports: Global business (other than Russia-CIS) at Rs. 116.42cr declined by 8% YoY due to 19% lower sales in the US market.

    (iv) Russia CIS sales at Rs. 35.29cr +26.13% YoY. Russian subsidiary’s sales at Rs. 16.16cr, 2% YoY, while exports to Ukraine/CIS markets at Rs. 19.13cr, +57% YoY.

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    Analysis of J B Chemicals & Pharma Buyback 2018 ( Return Analysis)

    1. Buyback Announcement date: 31.08.2018—– Share Price was 338

    2. 500 Shares bought at Rs. 338 means an investment of 1,69,000.

    3. Retail Acceptance Ratio was 37.5%. i.e. out of 500 shares, 187 shares have been buyback by the company. Profit on Accepted Shares–9724.

    4. The final Accepted Shares were taken back on 1.11.2018. The CMP on 01.11.2018 was 314. If someone sells his remaining shares 313 at a loss of Rs.24 per shares the loss would be (313*24=7512).

    5. Overall we can say a profit of 2212 on an investment of 1,69,000 in 2 months which is equivalent to 7.85% Annualized return.

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