Hot Stock Pick: JB Chemicals which is up nearly 90% in 2021 is poised for another 20% upside; here’s why

JB Chemicals Ltd which is up nearly 90 per cent so far in the year 2021 has outperformed the Nifty50 in the same period which is up a little over 26 per cent.

The company with a market capitalization of about Rs 15,000 cr hit a fresh 52-week high of Rs 1,984 on the BSE on 28 September. A potential move towards Rs 2,400 level translates into an upside of over 20 percent from Rs 1,955 hit on 28 September.

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Vanguard Group, one of the world's largest investment companies, Emerging Market Stock Index has picked up JB Chemicals 706,756 shares at an average price of Rs 1121.89.

The stock has been on buyers’ radar in 2021 and the recent positive crossover of the MACD indicator recorded earlier in September suggests that the upside could well stretch towards Rs 2400 in the next 3-6 months.

Moving average convergence divergence (MACD) is a trend-following momentum indicator. This indicator generates potential buying and selling signals and also tells us when the trend is reversing.

The Moving average convergence and divergence (MACD) has given positive crossover with its average and turned up from equilibrium level of zero on the daily chart.

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JB Chemicals has 7 plants across India producing a wide array of pharmaceutical products and solutions are united by a common passion for quality, the company website said.

“Technically, the stock is in strong uptrend forming higher highs and higher lows. In early July stock hit high of 1938 and then went into consolidating consolidation phase for next 3 months,” Ashish Chaturmohta, Head of Technical and Derivatives, Sanctum Wealth Management, said.

“It has formed a base and given breakout on the upside. The up-move has been on high volumes and momentum indicating buying participation in the stock,” he said.

“The stock can be bought at current levels and on dips to 1920 with stop loss of 1840 for target 2300-2400 in coming 3-6 months,” advises Chaturmohta.

About The Company:

J.B. Chemicals and Pharmaceuticals Limited, established in 1976, is one of India's leading pharmaceutical companies. The company earns 47% of its revenues from its domestic business and the rest 53% of revenue comes from international business.

Export formulations business contributes 39% of revenues, Contract Manufacturing contributes 10% and APIs business contributes the rest 4% of revenues, Sanctum wealth said. 

The company’s brands Metrogyl (amoebicides) and Nicardia (calcium channel blocker) featured in the top 130 brands in unit terms, while Rantac and Cilacar featured in the top 100 brands in value terms, it noted.

In Sept 2020, The KKR Group through its funds completed the acquisition of 54% stake mainly from the past promoters and now is the new promoter of the company.

(Disclaimer: The views/suggestions/advices expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)