Better Q3 for Indies, but Melissa Aftereffects and Interest Still Weigh on 9M Profit

  • Indies Pharma Jamaica Limited (INDIES) reported a 25.1% increase in net profit to J$38.51Mn for the third quarter ended July 31, 2026 (Q3 2026), as revenues recovered 12.4% to J$292.38Mn. However, a stronger third quarter was not enough to heal the 9M performance.
  • Buoyed by what management describes as a “visible trajectory toward recovery following Hurricane Melissa”, Q3 revenues rose 12.4% to J$292.38Mn from J$260.04Mn. The stronger topline was accompanied by a lower cost base, with cost of sales easing 2.1% to J$88.19Mn from J$90.04Mn. As a result, gross profit advanced 20.1% to J$204.19Mn and the quarterly gross margin widened by 448 basis points to 69.8%.
  • Administrative and other expenses rose 15.7% to J$143.88Mn, a slower pace than the 20.1% growth in gross profit. Consequently, when paired with other operating income of J$3.85Mn, profit from operations rose 33.1% to J$64.16Mn.
  • However, net profit growth faced side effects of finance costs totalling J$23.95Mn (+58.5%), owing to its larger and more expensive bond. In September 2025, Indies retired its J$805.0Mn 7.0% Sagicor Bank Jamaica bond with a five-year J$1.00Bn 9.5% facility from National Commercial Bank. This borrowing was 24.2% larger, at a coupon 250 basis points higher. Meanwhile, a foreign exchange loss of J$0.15Mn, which reversed Q3 2025 gains of J$1.71Mn, also suppressed the pre-tax profit growth to 15.1% at J$40.06Mn.
  • Notwithstanding the positive Q3, 9M 2026 earnings are down 28.5% to J$120.53Mn. Revenues (+0.1%) and gross profit (+0.8%) are largely flat, but higher admin and other expenses (+9.9%) and finance costs (+59.5%) were bitter pills to swallow and were symptoms of a weaker H1 206. The weaker H1 was due to post-Melissa disruptions and higher finance costs following the refinancing.
  • Looking ahead, performance should continue to normalise as the distance from the storm widens. With reconstruction progressing, and household and business activity being restored across the island, this supports the normalisation of demand for Indies’ products.
  • At the close of trading on September 21st, INDIES' share price was J$2.61, representing an 8.1% decline year-to-date. At this level, the stock trades at a P/E of 25.1x, above the Junior Market Health sector average of 22.5x and offers a dividend yield of 5.2%.

(Sources: Company Financial Statements & NCBCM Research)