JB Chemicals & Pharmaceuticals Ltd. :506943-IN: Earnings Analysis: 2017 By the Numbers : August 31, 2017

JB Chemicals & Pharmaceuticals Ltd. reports financial results for the year ended March 31, 2017.

We analyze the earnings along side the following peers of JB Chemicals & Pharmaceuticals Ltd. – Shilpa Medicare Limited and TTK Healthcare Limited (530549-IN and 507747-IN) that have also reported for this period.


  • Gross margins widened from 30.50% to 32.36% compared to the same period last year, operating (EBITDA) margins now 17.85% from 18.45%.
  • Year-on-year change in operating cash flow of 36.69% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017 2016 2015 2014 2013
Relevant Numbers (Annual)
Revenues 13132.89 11711.71 11210.29 10010.95 8457.58
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 1840.63 1625.47 1004.05 614.96 794.44
Earnings Growth (YOY) 13.24 61.89 63.27 -22.59 -88.28
Net Margin 14.02 13.88 8.96 6.14 9.39
EPS 21.7 19.16 11.84 7.26 9.38
Return on Equity 14.43 14.92 9.86 5.97 7.99
Return on Assets 8.78 9.16 7.05 4.63 6.34

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Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from 30.50% to 32.36%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

506943-IN‘s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days have declined to 124.88 days from 157.11 days for the same period last year.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

506943-IN‘s change in operating cash flow of 36.69% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for JB Chemicals & Pharmaceuticals Ltd.

Company Profile

JB Chemicals & Pharmaceuticals Ltd. is a holding company, which engages in the research, development, and sale of pharmaceutical products. It operates through the following business units: India; Russia & CIS; Global; Contrast Media; API; and Business Development. The India business unit produces medicine for gastro, cardiac, and pain management. The Russia and CIS business unit markets and sells over the counter and prescription drugs. The Global business unit commercializes generic branded medicines. The Contrast Media business unit offers radiopaque substances such as lohexol, lopamidol, diatrazoic acid, gadopentatic acid, and iodixanol. The API business unit caters active pharmaceutical ingredients which includes atenelol, clinidipine, diclofenac acid, diclofenac potassium, nifedipine, and gadopentatic acid. The Business Development business unit deals with contract manufacturing, joint ventures, marketing partners, in-licensing of products, and distribution network. The company was founded on December 18, 1976 and is headquartered in Mumbai, India.

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