Top Stock Pick: JB Chemicals & Pharmaceuticals

Thursday, December 30, 2010

J. B. Chemicals and Pharmaceuticals (NSE:JBCHEPHARM) is in the business of manufacturing and marketing specialty medicines in various dosage forms, herbal remedies, diagnostics, generic drugs, active pharmaceutical ingredients (APIs). It has a market cap of Rs. 236 crores. Based on recent reported quarterly results(Q3 2010), sales growth (YoY) was 36.2%, and EPS (YoY) increased 42.6%. JB Chemicals & Pharmaceuticals has a ROE of 16.5% and ROCE of 17.6%. The 3-year earnings growth is 12.5%, and 3-year sales growth is 8.4%. The debt-to-marketcap ratio is 0.13. The P/E is 9.63 (TTM). The company generates 50% of its sales comes from Russia region and 35% from the domestic market. The company is growing its presence in other regions as well as in India. The stock is trading at a attractive valuation vis-a-vis its peers

The relative price performance of JB Chemicals measured over the last 2 years puts it in the top 20% of all stocks. Technically, the daily & weekly charts look strong. The stock has been in a consolidation phase since November. It found support at the 100-day SMA, and quickly rebounded. Volume analysis on weekly charts indicates that the consolidation has taken place on decreasing volume, which is desirable. The stock is getting ready to take out the November highs. The stock is likely to hit a price target of 170 in the next few months. See latest tweet buzz below the charts. Also, see slide show on stocks in pharma & health sector.