JB Chem is Ashish Dhawan’s flagship stock. He holds a gigantic quantity of 81,79,608 shares, worth a staggering Rs. 163 crore. Ashish Kacholia holds 8.49L shares worth about Rs. 17 crore.
JB Chem came to our attention when Daljeet Kohli put a buy on it in October 2013 when it was at Rs. 94.
Then, in December 2013, when JB Chem surged to Rs. 128 Sharekhan came on the scene and recommended a buy.
ICICI Direct followed suit and also recommended a buy.
Today, in the wake of good Q1FY15 results, JB Chem is at Rs. 184 and has achieved all the targets that were set out for it.
Now, the question is about the future.
Daljeet Kohli has hiked his ‘conservative’ target price to Rs. 211. He has made it clear that if his theory that there is a “big trigger point” comes true, the target price could be much higher.
Sharekhan has also increased its target price to Rs. 251 and recommended a buy. Sharekhan points out that the outlook remains strong and that the operating performance achieved during Q1FY2015 is sustainable with an upside potential in the Russia-CIS business, where the company is in the process of expanding its distribution network, and the US business, where the company has started selling products through partners. Sharekhan expects strong traction in the domestic business to continue with a focus on field force productivity. A rich cash balance (of approximately Rs. 450 crore) keeps alive the scope for inorganic initiatives. The revenues and profits are expected to grow at a CAGR of 14% and 24% over FY2014- 2016 respectively, it adds.
Sunidhi Securities has issued a detailed report where it advises a buy “for invigorated gain”. Sunidhi points out that JB Chem plans to continue to pursue focus on harnessing the potential of the existing products basket, selective new product launches and increase in productivity. The company is fully focused on this business, which has significant value potential. It adds that JB Chem plans to invest about Rs. 140 crore in the new capacity and related infrastructure in the next 12-18 months through internal accruals.
Personally, the recommendation to buy JB Chem appeals to me. It is based on tangible information and strong logic. I have a chunk of the stock in my portfolio and intend to keep adding on dips.