JUBILANT INGREVIA LIMITED
The Company
Jubilant Ingrevia Ltd (JIL), part of the ‘Jubilant Bhartiya Group’ is the life science and Specialty Chemical division, which demerged from ‘Jubilant Life science Ltd’, in Feb,2021. The Company offers a wide range of Chemical Ingredients that fits application in diverse sectors, including pharmaceutical, agrochemical, nutrition, consumer and industrial markets. Its business also includes custom research and manufacturing for pharmaceutical and agrochemical customers on an exclusive basis. The company’s corporate headquarters situated in Noida, India and it has 56 manufacturing units that spread across five locations of three states in India serving over 1500 customers in more than 50 countries across the globe. As of March,2023, JIL’s 43% of the revenue comes from export, out of that majority comes from regulated markets including North America, Europe and Japan.
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Almost 48% of the Company’s revenue comes from Life science chemicals divisions that include various Life science ingredients and Specialty ethanol. Another 34% revenue comes from specialty chemicals that include Specialty ingredients, Fine chemicals, Crop protection chemicals and Contract development and manufacturing. The remaining 18% revenue derived from Nutrition and Healthcare solutions that includes Animal nutrition & health solutions as well as Human nutrition products.
Business Segments
1.Specialty Chemicals:
Jubilant Ingrevia is a global leader in the specialty chemicals industry, having product a portfolio that includes a wide range of specialized chemicals such as Pyridine and Picolines, Cyanopyridines, Piperidine, Diketene down-streams and value-added derivatives from these products. These instrumental products are used in the manufacturing of various chemical compounds, including agrochemicals, pharmaceuticals, nutrition solutions, fine chemicals, oilfield chemicals, electronic chemicals and solvents.
2. Nutrition and Health Solutions:
JIL’s major products include nutritional ingredients such as Vitamin B3, Vitamin B4, Picolinates and premix formulations for both animal and human nutrition. Backward integration is one of the key strengths of the company in this business, as it leverages the building blocks from its own Chemical Intermediates and Specialty Chemicals segments to develop and deliver superior quality products.
3. Chemical Intermediates:
The company’s chemical intermediates division focuses to developing and supplying building block ingredients based on acetyls and ketene chemistry platforms. Acetyl products have applications in numerous daily use industries such as pharmaceutical formulations, printing inks, adhesives, coatings, etc. Ketene building blocks are used to make acetylate nucleophiles to produce esters, amides and other compounds that are difficult to create with other reagents.
4. Specialty Ethanol:
Under the Acetyls sub-segment JIL produce and markets Acetic Anhydride and Ethyl Acetate, out of this Acetic Anhydride is the company’s highest-selling product in this category. In the Specialty Ethanol sub-segment, it supplies Ethanol to oil marketing companies for Ethanol blending. It also provides pharmaceutical-grade Specialty Ethanol to various pharmaceutical customers for niche applications.
Major Strengths
Jubilant Ingrevia has emerged as one of the leading global as well as domestic manufacturers of specialty chemicals in Pyridine based derivatives. The company renowned for its diverse product portfolio through continuous product innovation and capacity addition with over four decades of industry presence. Company’s backward integration capabilities not only allow it to leverage feeds-tocks Acetaldehyde and Formaldehyde to manufacture Pyridine and Picolines, but also helps to cost benefits, quality consistency as well as the ability to generate value-added products.
Jubilant Ingrevia has a large, diversified portfolio consisting of almost 135 Products in its portfolio and 35 products in the pipeline for the next four years. The company has a strong market position globally, for several of its products. JIL is globally No. 1 status for manufacturing in 17 pyridine derivatives and among top 2 in pyridine beta. It is also in a global position of among top 2 in vitamin B3, leadership in vitamin B4 in domestic market and the globally among top 2 in the Acetic Anhydride market. Presently, 57% of the company’s revenue derived from domestic market, 26% from European Japan market volume, 4% from North American market volume and the remaining 13% contributes rest of the world. With this, JIL have completely diluted the risks associated with dependence on any specific product, customer or geography.
Aggressive Expansion
Jubilant Ingrevia plans significant investments across its Specialty Chemicals, Nutrition & Health Solutions and Chemical Intermediates segments between FY 2023-2025, with capacity enhancements, product innovations and technology driven manufacturing platforms. The company plans to establish a GMP-specified plant for pharma-grade Vitamin B3 manufacturing and setting up an additional plant to enhance its product portfolio of animal and human nutritional ingredients.
During FY 2023, JIL commissioned its new global scale Acetic Anhydride plant at its manufacturing site in Bharuch, Gujarat. In addition to this, on 1 January 2024, the Company started commercial production at its multipurpose agro-intermediate plant located in Bharuch, Gujarat. This new plant is designed to produce value-added derivatives to synthesizing agro-intermediates, specifically to meet the increasing global demand for agro intermediates.
Improved Industry Outlook
Indian specialty chemical companies are showing signs of recovery both in revenue and margins in the recent past and expected to perform well in the near future as chemical prices seems bottomed out. In addition to this, according to company sources, Global customers continue to explore possibilities of shifting their sourcing from higher cost countries to India, to remain competitive. Apart from this, customers are looking for diversifying their supply chain from China to have a reliable alternate second source. Most of the global specialty chemical manufacturers prefer India as the most potential alternate. This favorable global trend along with globally competitive cost structure in several products with track record of timely delivery and long-standing relationship with major players, Jubilant Ingrevia has exciting opportunity for sustainable growth.
Though the situation is not fully out of clouds, Indian chemical companies are now highly competitive globally with rising share in specialty chemicals industry on improved capital expenditures by the companies and reduction in production costs on Govt’s support with the production linked incentives schemes.
Financials
Jubilant Ingrevia reported revenues of Rs. 1020 Crores for the Q2FY24, down from Rs 1304 Crore YoY, a fall of 21.8%. Consolidated net profit reported at Rs 57 Crores, down 32% from Rs 84 Crores in the same quarter of the previous year. However, revenue was Rs 1075 Crore in Q1FY24 with net profit of Rs 58 Crore. The Earnings per Share for the Q2FY24 stood at Rs3.61, down from Rs 5.29 in the same quarter of the previous year.
Risks
Substantial part of the company’s business comes from overseas market; hence the company faces stiff competition of both domestic and international players, particularly from Chinese manufacturers who benefits from large scale capacities, favorable policies and other advantages. This scenario may adversely affect the company’s ability to maintain market share and generate projected margins.
The risk of failure or delay to develop products that are qualified with accepted standards will significantly reduce the Company’s reputation and competitive edge as well as to the financial loss associated with the unsuccessful launch.
Sector: Commodities
Market Price: Rs. 485.85 as on today
FV: Rs 1/-
Stock Name: Jubilant Ingrevia Ltd
BSE Code: 543271, NSE Code: JUBLINGREA
Market Cap.: Rs 7958 Cr
Book Value: Rs. 170
Segment: Specialty Chemicals
Incorporation: 2019
Headquarters: Uttar Pradesh, India
