Jubilant Ingrevia

Jubilant Ingrevia Ltd (JVL) houses the Specialty Chemicals, Nutrition & Health Solutions, and Life Science Chemicals businesses, which have been demerged from Jubilant Pharmova Ltd (erstwhile Jubilant Life Sciences Ltd)

It has a Strong presence in diverse sectors and its vertically integrated and due to this , it is Globally Lowest cost producers for most products.

Multi Location Manufacturing & Operation Excellence is achieved by company over the years

Leadership team has an average 30 years of industry experience

Company has expertise in 35 technological platforms at large commercial scale and

Company also has an expertise to handle multistep chemistry (up to 13 steps) at large scale.

Three major segments of Speciality chemicals, Nutrition and Health solutions and Life sciences chemicals

As shared from Company presentation 25% of Life sciences chemicals are consumed in house by specialty chemicals segment while for Nutrition and health solutions segment (vitamin B3, 100% in house sourcing done from Speciality chemicals)

Financial Highlights– RoE, RoCE stood at 15%+, EBITDA grew by 53% YoY while revenue from all segments growing well

Jubilant Ingrevia

Growth triggers

Company is planning to invest 900 cr (550 cr,100cr, 250 cr in different segments by FY24) and expecting 2x revenue in ~5 years

Multiple products in different segments are in pipeline to be launched in coming years

There is a strong demand for Acetic Anhydride and there is no new facility addition announcement globally in the recent past. Company’s customers are exploring to shift from high cost to low-cost countries. They are adding another Acetic Anhydride facility to increase capacity by ~35% by investing ₹250cr over next 3 years.

Co is planning to increase focus to leverage its long standing relationship with innovator pharma & agro-chemicals companies to expand its CDMO operation.

Company is also moving up the value chain in most of their product segments

In the process of launching its diketene (highly complex due to high temperature cracking and storage hazards) and its value added derivatives.

Risks

Raw Materials Prices: Key raw material for life sciences biz is acetic acid. Hence, dependent on the prices of Acetic Acid(Very volatile). 

Large capex in next few years: he funding of this 900cr capex will largely from internal accruals. But if for some reason this capex is not completed on time or need more debt then it may affect profits in coming years

Exit Strategy

Acetic acid Raw material prices hurting company growth or

Any ban on application of its pyridine and similar substances by other countries can hurt the company growth

In such cases , its better to exit and have a relook on invested amount

Current Market price of 760 Rs, Company looks optically expensive for investment but looking at big picture if it sustains 10.5 eps for next 3 quarters giving 42 eps for FY22 , stock price looks to have decent upside available

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