Summary
J.B. Chemicals & Pharmaceuticals Limited - Q3 FY 2026 Earnings Call Summary Monday, January 19, 2026, 1:30 PM IST
Event Participants
Executives 3 Jason D’Souza (EVP), Kunal Khanna (President, Operations), Narayan Saraf (CFO), Nikhil Chopra (CEO)
Analysts 6 Abdulkader Puranwala (ICICI Securities), Akshaya Shinde (SMIFS Limited), Ananya Khanna (Alpha Alternatives), Bino Pathiparampil (Elara Capital), Naman Bagrecha (IIFL Capital), Pareen Parikh (Shree Capital), Sumit Gupta (Antique)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹1,065 crores | +11% YoY; driven by 10% domestic and 12% international growth. |
| Domestic Formulations | ₹620 crores | +10% YoY; outperformed IPM growth of 9% with MAT growth of 12%. |
| International Business | ₹445 crores | +12% YoY; international formulations specific growth was +20% YoY. |
| CDMO Revenue | ₹117 crores | Flat YoY; sustained momentum despite a high base in Q3 FY25. |
| API Revenue | ₹21 crores | Reported for Q3 FY26; remains a minor part of the mix. |
| Gross Margin | 69.1% | +200 bps YoY; driven by favorable product mix, price hikes, and stable raw material costs. |
| Operating EBITDA* | ₹305 crores | +13% YoY; excludes non-cash ESOP costs. |
| EBITDA Margin | 28.7% | +60 bps YoY; management noted consistent focus on operational efficiencies. |
| PAT | ₹198 crores | +22% YoY; aided by higher other income and margin expansion. |
| Other Income | ₹18 crores | +125% YoY; increase due to treasury income from surplus cash. |
*Excluding non-cash ESOP charges.
Geographic & Segment Commentary
- Domestic Business: Reported ₹620 crore revenue with 10% growth. Outperformed the Indian Pharma Market (IPM) by 300 bps on a MAT basis. Chronic brands like Cilacar (+25%) and Nicardia (+30%) saw robust growth, while acute gastro portfolios experienced a marginal slowdown.
- International Formulations: Grew 20% YoY to ₹306 crores. Growth was primarily driven by strong volume demand in South Africa and Russia subsidiaries, alongside branded exports. Management expects high single-digit growth for the full year.
- CDMO Segment: Remained flat at ₹117 crores for the quarter due to a high base effect from the previous year. The segment maintains a quarterly run rate of ₹115–120 crores. Strategic focus remains on maintaining this platform as a central pillar for margin protection.
Company-Specific & Strategic Commentary
- Product Mix & Pricing: Realized a ~7% price hike in domestic markets during the quarter. The shift toward chronic therapies and premium international geographies contributed to the 200 bps gross margin expansion.
- Debt & Liquidity: The company has repaid all debt, resulting in higher treasury income from surplus cash. This liquidity supports a strong balance sheet for the next stage of strategic development.
- Brand Scaling: Six brands now feature in the top 300 brands of the IPM. The company aims to sustain a run rate of ₹17–18 crores per month for the ophthalmology portfolio within the next 3-4 months.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EBITDA Margin | 27% to 29% | Reinstated for FY26; management confident in maintaining efficiency-driven margins. |
| Domestic Growth | 200-300 bps > Market | Targeting outperformance of IPM through volume growth in chronic space. |
| International Growth | High single-digit | Expected for full FY26 based on a strong Q4 order book. |
| CDMO Growth | 10% to 12% | Target for FY27 as the platform scales post-base correction. |
| ESOP Charge | ~₹40 crores | Anticipated non-cash charge in Q4 FY26 if the change of control event occurs. |
Risks & Constraints
| Risk | Context |
|---|---|
| Acute Segment Volatility | A slowdown in the acute gastro portfolio impacted domestic growth by ~1-1.5% this quarter compared to historical double-digit trends. |
| Transaction Uncertainty | The merger process involving Torrent/Change of Control is ongoing; timing and synergy realizations remain subject to regulatory timelines. |
| Seasonality | Management noted Q4 (March) is typically a soft month for domestic pharma due to distributor inventory year-end closing. |
Q&A Highlights
Domestic Growth Trends
- Question: Is the lower domestic growth (10% vs 12-14% guidance) a permanent slowdown? (Sumit Gupta)
- Answer: Growth remains 200-300 bps above market. The delta is due to a slowdown in acute gastro; however, chronic brands like Cilacar-T grew 33% (Kunal Khanna).
Merger with Torrent
- Question: What is the timeline and synergy potential of the merger? (Ananya Khanna / Bino Pathiparampil)
- Answer: Deal closure is expected in Q4 FY26. The actual merger may take an additional 6-9 months from there. Synergies cannot be commented on currently (Narayan Saraf / Jason D’Souza).
CDMO Outlook
- Question: How should we view the CDMO run rate and utilization? (Abdulkader Puranwala)
- Answer: The current quarterly run rate is ₹115-120 crores. We expect to grow this segment by 10-12% in FY27 (Nikhil Chopra).
Margin Sustainability
- Question: What drove the margin expansion and will it continue? (Sumit Gupta)
- Answer: Expansion was driven by a favorable mix (chronic/CDMO) and stable raw material costs. Gross margins are expected to stay between 68% and 69% for the full year (Nikhil Chopra).
Key Takeaway
J.B. Pharma delivered a steady Q3 FY26 with 11% revenue growth and significant 22% PAT growth, underpinned by a 200 bps expansion in gross margins to 69.1%. While domestic growth at 10% was slightly dampened by a slowdown in the acute gastro segment, the company continues to outperform the IPM by 300 bps, led by high-growth chronic brands like Cilacar and Nicardia. International formulations grew a robust 20%, rebounding from a flat Q2. Strategically, the company has utilized its debt-free status to boost treasury income while preparing for a change of control event/merger expected to close in Q4 FY26. Management has maintained its 27-29% EBITDA margin guidance and expects high single-digit growth in international markets for the full year. Investors should monitor the non-cash ESOP charge of ₹40 crore expected in Q4 and the progress of the Torrent transaction.
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