DARKHORSESTOCKS IS NEITHER SEBI REGISTERED NOR ANY KIND OF ADVISORY SERVICE

🔔 🔔 Click here to get all the updates delievered straight to your WhatsApp!

Life Science and Speciality chemical company worth exploring.

Jubilant Ingrevia, a global integrated Life Science products and Innovative Solutions provider company which serves Pharmaceutical, Nutrition, Agrochemical, Consumer and Industrial customers with its customised products and solutions that are innovative, cost-effective and conforming to excellent quality standards. Jubilant Ingrevia’s portfolio also extends to custom research and manufacturing for pharmaceutical and agrochemical customers on an exclusive basis. 

Current Market Price on the date of publishing this report-: 422 Rs

JUBILANT INGREVIA

Junbilant ingrevia was formed on account of demerger between Jubilant Pharmova where the company decided to hive of its life science and speciality chemical business into a new subsidiary. The demerger was proposed to ensure depth and focus to adopt strategies necessary for growth, unlock shareholder value with direct ownership and attract focused investors in each of the business entities thereby streamlining the businesses across two companies. Combined revenue of Jubilant life before demerger was around 8000 crs.

Starting the business of Life Science Ingredients more than 40 years ago company has expanded its operations globally with more than 100 commercial products.

Jubilant Ingrevia is a part of the Jubilant Bhartia Group, a diversified global conglomerate with global workforce of around 46,000 employees, founded by Mr.Shyam S. Bhartia and Mr.Hari S. Bhartia.  Jubilant ingrevia has 90 highly qualified scientists of which 20 are PhDs holders. Company has 3 RDT centers in Noida, Gajraula and Bharuch with a dedicated Project Management team to address enquiries. Apart from that company has 35 Key technology platforms developed & commercialized to global standards of cost & quality some of which are unique like Ammoxidation, Vapor phase reactions, photochlorination, Grignard, Ketene handling, Chichibabin etc.

Company has around 60 New Products Pipeline for next 3-4 years as of March 2021 across following categories

Business Segment No. of New Products Speciality Chemicals – 32, Nutrition & Health Solutions- 24, Life Science Chemicals – 7.

Company has various manufacturing facilities spread across India with vast amount of land available at its disposal for future use. Some of the major facilities include 

  • Gajraula, Uttar Pradesh, India spread across 463 acres -: Integrated facility for Speciality Chemicals & Chemical Intermediates 
  • Bharuch, Gujarat, India spread across 310 acres -:  Speciality Chemicals, Nutrition & Health Ingredients & Chemical Intermediates facility located in SEZ 
  • Nira, Maharashtra, India spread across 144 acres -: Chemical Intermediates 
  • Samlaya, Gujarat, India spread across 109 acres -: Animal Nutrition & Health Solutions 

Thus in total company operates 50 Plants across 5 sites in 3 states 

Jubilant Ingrevia has a Global presence through investments in India, USA, Canada, Europe, Singapore, China, Sri Lanka and Bangladesh etc.

Company is one of the most preferred partners having 1400+ customers of which it has 15 out of top 20 Pharma companies, 7 out of 10 Agrochemical companies as its clients and more then 8+ collaborations with global Pharma and biotech companies.

The breakup of the customers across various segments is as follows.

  • Speciality Chemicals: 420
  • Nutrition & Health Solutions: 400
  • Chemical Intermediates: 600 

As of March 2021 Company had made 152 patent applications in total with 94 patents granted till date.

Jubilant Group

The Jubilant Bhartia Group is an Indian conglomerate with interests in pharmaceuticals, food services, agribusiness, energy, and other services.It was founded in 1978 by Shyam Sundar Bhartia and Hari Bhartia and is headquartered in Noida, Uttar Pradesh.

The Group has four flagships companies listed on Indian Stock Exchanges – Jubilant Ingrevia Limited, Jubilant Pharmova Limited, Jubilant FoodWorks Limited and Jubilant Industries 

Business Products

The business of the company is divided across 3 segments mainly as shown in the above picture.

Speciality Chemicals Segment

Speciality building blocks such as Pyridine and Picolines, Cyanopyridines, Piperidine, and Pyridine based value-added products are included in Jubilant Ingrevia’s Speciality products portfolio for the production of a variety of Agrochemicals, Pharmaceuticals, Nutrition, Fine chemicals, Oilfield chemicals, Electronics, and Solvents. Jubilant Ingrevia is one of the few firms with complete forward and backward integration in the Pyridine and Picolines value chain, in addition to being one of the major worldwide producers in the Pyridine and Picolines value chain. As of now company has around 85+ products under this category.

What is Pyridine?

Pyridine is a chemical that is used to dissolve other compounds. It’s also used to manufacture pharmaceuticals, vitamins, food flavorings, paints, colors, rubber goods, adhesives, insecticides, and herbicides, among other things. Pyridine may also be produced in the environment by the decomposition of a variety of natural materials.

What is Diketne?

Diketene derivatives are important industrial intermediate that is primarily used for the production of esters and acetoacetate amides. These diketene derivatives are also used in the production of pigments and dyestuff. These are highly reactive building blocks that can be blended to develop a wide range of products.

Some of the key aspects of speciality chemical Business include

  • Jubilant is Globally among Top 2 in (Pyridine+Beta) and Globally #1 in 17 Pyridine Derivatives.
  • Jubilant Ingrevia is one of the lowest cost producer of Pyridine globally.
  • Company’s products are REACH, HALAL & KOSHER certified 
  • Market size Jubilant Products (excluding Diketene):
    is $1277 Mn of which Jubilant’s Share is roughtly 14% 
  • Market size Diketene Products: $195 Mn 
  • Company has set an ambitious target of INR 1,230 Crores of investment under this segment by FY’25 

Nutrition and Health Solutions 

Straight Nutritional Ingredients including Vitamin B3, Picolinates, and premix solutions for animal and human nutrition are all available from Jubilant Ingrevia. The company’s Life Science Chemicals and Specialty Chemicals businesses provide comprehensive backward integration, providing it a competitive advantage over competitors.

Jubilant Ingrevia is the world’s largest producer of niacinamide and one of the top two producers of vitamin B3 in the world, as well as India’s largest producer of vitamin B4.

It is also the ‘Partner of Choice’ for over 400 consumers throughout the world. Under the trademark Phytoshield, the company has recently begun manufacturing a herbal variety of items for animal feed.

What is Vitamin B3 (Niacinamide/ Niacin)?

Vitamin B3 is an important part of the vitamin B complex. Niacinamide, also known as Nicotinamide, and Niacin (also known as Nicotinic acid) are two distinct forms of Vitamin B3 that serve as important precursors for the production of the co-enzymes NAD (Nicotinamide Adenine Dinucleotide) and NADP (Nicotinamide Adenine Dinucleotide Phosphate), which aid in the human body’s protein and carbohydrate metabolism.

Vitamin B3 is an important ingredient that helps the body produce energy and manage cholesterol levels. Because the human body does not generate this vitamin on its own, it must be obtained from food or supplementation.

In the human nutrition sector, both Niacinamide and Niacin serve important roles.

Key Aspects of the company under this segment

  • Jubilant Ingrevia has 20% Global market share in Vitamin B3 and 69% domestic share in Vitamin B4.
  • Company has 5 Nutrition Ingredients & 18+ branded solutions (For Animal Health) 
  • Company is among Global top 2 companies  in Vitamin B3  as well as Domestic leader in Vitamin B4 (Feed) 

Under this segment company plans to double the revenue by FY’26, as well as company has around 18 Products in Pipeline.

Life Science Chemicals / Chemical Intermediateries

 

Jubilant Ingrevia supplies building block chemicals based on the Acetyls and Ketene chemistry platform, which may be used in a variety of everyday products, particularly in metropolitan settings.

In the merchant market, the firm is ranked among the leading makers of Acetic Anhydride and Propionic Anhydride. Jubilant Ingrevia is the largest producer of Bio-acetaldehyde in India.

Its products are utilized in-house and in a variety of downstream businesses for a variety of life science compounds and intermediates. Among independent distilleries in India, it is also the top provider of ethanol to Oil Marketing Companies (OMCs) under the Ethanol Blending Program (EBP).

To ensure an uninterrupted supply of feedstock to its facilities and finished goods to contractual customers across the world, company has built significant storage capabilities at its plants and ports, as well as a worldwide distribution center in Antwerp.

Pharmaceuticals, food and nutrition, agrochemicals, health and hygiene, flexible packaging, paints and coatings, adhesives, aromatics, dyes intermediate, and industrial solvent are just a few of the uses.

Key aspects of this segments include

  • Jubilant Ingrevia has 8 Products (Acetic Anhydride, Ethyl Acetate ,Propionic Anhydride, Aldehydes, Speciality Alcohol, Anhydrous Alcohol) under this segment.
  • Company is Globally no 2 in Acetic Anhydride Merchant Mkt as well as No.1 in India and is Expected to be a Global leader by FY’24.
  • Company is among top 2 in Ethyl Acetate in Domestic market .
  • Company has a vision to double the Revenue of this segment by FY’26, and has around 7 new Products in Pipeline .
  • Company has an Investment target of around INR 620 Crores to be made in this segment around FY’25 .

Capex

Company has till date Committed around Rs. 800 Crores in capex for various activities of which the cash outflow pertaining to FY 22 was around 235 crores. Based on this investments made company expects a Peak Revenue of Rs. 1750 Crores From Rs. 800 Crore Investment.

Going ahead company plans to do an additional Capex to be Committed during FY’23 & FY’24 Rs. 1250 Crores with an Estimated Cash Outflow of Rs.550 Cr, Rs.650 Cr. & Rs.600 Cr. respectively pertaining to the years FY’23,FY’24 & FY’25 respectively. Company Intends to be fund this capex expenditure through internal accruals.

The future Capex expenditure across various segments is bifurcated as follows 

Speciality Chemicals Rs 750 Crores
The above-mentioned investment will be used to expand Diketene Derivatives, Agrochemical Intermediates, and a new greenfield GMP plant for CDMO. It is also recommended that funds be spent in new plants to explore fluorination derivatives and agroactives (Fungicides)

Nutrition & Health Solutions Rs 200 Crores
The above-mentioned investment will be used to establish a GMP-compliant plant for pharmaceutical-grade vitamin B3 as well as plants to expand the company’s line of animal and human nutrition products.

Chemical Intermediates Rs 300 Crores
The above-mentioned investment will be used to build a Grain-based Green Specialty Ethanol Plant as well as other de-bottlenecking facilities.

Financials

For the Year Ended March 22

  • Revenue increased by 42% year over year, owing to development in all business sectors.
  • Revenue from Specialty Chemicals increased by 24% year over year, while volume increased by 16%.
  • Nutrition and Health Solutions revenue increased by 22% year over year, while Niacinamide volume increased by 9%.
  • Chemical Intermediates income increased by 61% year over year, while Acetic Anhydride volume increased by 3% year over year.
  • EBITDA was Rs 863 crore, up 38 percent on a year-over-year basis.
  • PAT increased by 51% year over year.
  • In FY22, ROCE increased to 27.8% from 20.2 percent in FY21; in FY22, ROE increased to 21.9 percent from 16.4 percent in FY21.

Debt Reduction

  • The firm reduced its gross debt by Rs 319 crore and its net debt by Rs 251 crore as of March 31, 2021.
  • The ratio of net debt to EBITDA as of March 31, FY22 was 0.21 times, down from 0.69 times as of March 31, 2021.
  • In Q4’FY22, the closing blended interest rate was 5.73 percent, compared to 7.01 percent in Q4’FY21.

For Q4FY22

Net Sales stood at Rs 1,295.75 crore in March 2022 up 89.4% from Rs. 684.13 crore in March 2021.

Quarterly Net Profit stood at Rs. 68.59 crore in March 2022 up 26.18% from Rs. 54.36 crore in March 2021.

EBITDA stood at Rs. 151.56 crore in March 2022 up 26.6% from Rs. 119.72 crore in March 2021.

Jubilant Ing EPS had decreased to Rs. 4.31 in March 2022 from Rs. 5.20 in March 2021.

Speciality Chemicals Segment 

Revenue from Specialty Chemicals increased by 35% year over year. Sales from clients that use Agro Chemicals increased by 81 percent to 37 percent of total revenue, up from 28 percent previously. YoY

During the quarter, revenue from Nutrition end use increased as well. On a year-over-year basis, EBITDA climbed by 17 percent, but EBITDA Margin fell to 18.2 percent from 21.1 percent in Q4’FY21, owing to higher input costs that we are in the process of passing on.

Nutrition & Health Solutions Segment 

North America’s revenue share climbed to 19 percent from 14 percent previous year. Volumes of food and cosmetics increased dramatically.

On a year-over-year basis, EBITDA increased by 18%. The EBIDTA margin increased to 24.4 percent in Q4’FY21, up from 21.4 percent in Q4’FY21. Due to greater realisation, the EBITDA margin increased by 308 basis points.

Chemical Intermediates Segment 

Chemical Intermediates income increased by 18 percent on a year-over-year basis, owing to higher pricing for ethyl acetate and acetic anhydride. Resulting from a rise in the price of feedstock On a year-over-year basis, revenue from Europe and Japan has increased dramatically. The EBIDTA Margin was 4.6 percent.

Managements Comments and future outlook

Management has reviewed and confirmed additional growth capital investments, stating that it plans to invest INR 1,250 crore in FY23 and FY24 to expand newly added chemistry platforms such as Diketene and agro actives, as well as further strengthen its leadership in selected product portfolios, such as the CDMO projects. In addition, as a new business platform, the company wants to enter fluorinated derivatives, fungicides, and grain-based speciality ethanol.

At current rates, the company expects to complete and commission all of these additional plants by FY25, bringing incremental peak revenue of INR 2,750 crore.

Jubilant Ingrevia aspires to generate overall annual sales of INR 9,500 crore or more after completing this overall growth-related capital expenditure of INR 2,050 crore, which will also enhance the revenue mix of the speciality and nutrition segments. Management expects to achieve 9000 crore revenue latest by FY27 thereby implying a topline cagr growth of about 13% which seems to be very reasonable growth.

In the coming period management has guided of double digit volume growth however the margins are expected to remain under pressure due to increased raw material prices and the time lag between passing the increasing prices to the customers.

Management has also expressed that the company has unutilised Mat credit which would be set off in the coming period as a result the company plans to switch to the new tax regime from fy 24 there by the future tax rate would be reduced to 24-25% from the current tax rate of around 31-32% which could significantly boost the bottomline in the coming period.

One of the primary advantages of the firm being in this area is that it is involved in fluorination derivatives or agro actives, which are not generic items. Because these aren’t mass-produced items, they’re in demand from innovative worldwide consumers, for whom the firm has designed products precisely to meet their needs.

Sectorial Outlook

Chemical Industry

Speciality Chemical

Nutrition

LIFE SCIENCE CHEMICALS

Conclusion

Jubilant Ingreavi a part of the Jubilant Bhartia Group, a diversified global conglomerate with global workforce of around 46,000 employees having companies such as Jubilant Ingrevia Limited, Jubilant Pharmova Limited, Jubilant FoodWorks Limited and Jubilant Industries has around 90 highly qualified scientists of which 20 are PhDs holders. Apart from that company has made 152 patent applications in total with 94 patents granted till date.

Additionally company has 60 New Products in Pipeline to be launched over the next 3-4 years as of March 2021. Management has expressed an amibitious yet achievable target of 9000 crore revenue by 2027 implying a cagr growth of about 13% with increased EBITA margins and reduced tax rates from fy 24 thereby it is expected to add significantly to the bottomline Net profits. Thus given the optimistic outlook for the coming period by the management as well the life science and speciality chemical business which is poised to grow in the coming period Jubilant Ingrevia is worth exploring from a long term perspective of 3-4 years.

Note-: Since the company has been demerged just in FY 21 Financials for the past years are not available and thus the financial charts have not been prepared.

JOIN US TODAY

Get all the updates directly on WhatsApp !