Jubilant Ingrevia Ltd - Q3FY22 Analysis
Updated: Feb 13, 2022
While the last quarter i.e. Q2FY22 was a mixed quarter in terms of margin for Jubilant Ingrevia, Q3FY22 was much better. On a year on year basis, Jubilant Ingrevia's revenue grew by 44%, EBITDA by 41.4% and Profit after tax by 41.8%.
Before we go any further, I also have written a detailed blog on Jubilant Ingrevia, which you can read below:
Jubilant Ingrevia Ltd - Moving Up the Value Chain
Also, you can read:
Jubilant Ingrevia Ltd - Q2FY22 Analysis
Financial Performance: Jubilant Ingrevia Ltd - Q3FY22 Analysis
The quarter saw strong demand from Pharma, Nutrition and Agro-Chemical business.
The best performer in this quarter was 'Nutrition & Health Segment' segment, where the revenue growth was 38% and EBITDA growth was 89%. This was due to increase in Vitamin B3 demand and realization.
There was good growth in revenue for life sciences business at 60% where the EBITDA grew by 47%.
Like every other company, Jubilant Ingrevia was faced with input cost pressure. The company was able to deal with cost inflation by passing on the increased cost to its customers.
Gross Debt reduced by Rs 263 Crore and Net Debt by Rs 201 Crore from 31st March 2021 to 31st Dec 2021, leading to substantial decline in interest cost. The interest cost declined from ₹13 cr to ₹5cr YoY.
Average blended interest rate for Q3'FY22 was 5.25%, as against 7.01 % in Q4’FY21.
Net Debt to EBITDA in Q3’FY22 stands at 0.24 times, from the earlier level of 0.69 times as on 31st March, 2021.
The company also declared an interim dividend of Rs 2.5 per equity share of Rs 1 each.
Jubilant Ingrevia Ltd - Q3FY22 Segmental Perfornance
Now, let me take you through Jubilant Ingrevia's 3 segmental performance:
Specialty Chemicals: Contributed to 26% of total Revenue in Q3FY22
In the speciality chemicals, Pharma Sales share grew to 52% from 47% YoY while Agrochemicals sales was at 25%.
EBITDA Margin increased at 21.8% vs 20.7% in Q3’FY21, mainly due to higher volumes and improved realization despite higher input costs.
Number of products in the existing portfolio: 85
Products in Pipeline: 36
Investment to be made between FY21-FY24: ₹550cr
25 plants across 3 Sites
2. Nutrition & Health Solution: Contributed to 15% of total Revenue in Q3FY22
During the quarter, Vitamin B3 demand and realization increased.
Revenue share from Europe increased to 36% as against 20% last year and share from North America increased to 21% from 11% YoY. Both these factors lead to significant improvement in the EBITDA margin of Nutrition segment from 17.8% to 24.5% YoY.
Among this segment, 80% revenue was towards animal feeds whereas 17% was towards food.
In its effort to move up the value chain, Animal Nutrition business continues making efforts to increase share of speciality premixes through various initiatives.
Company has 21% Global market share in Vitamin B3 (Here the company is the lowest cost manufacturer) and 60% domestic share in Vitamin B4.
Number of products in the existing portfolio: 5 Nutrition Ingredients & 18+ branded solutions for Animal Health
Products in Pipeline: 18
Investment to be made between FY21-FY24: ₹100cr
5 plants across 2 Sites
3. Life Sciences Business: Contributed to 59% of total Revenue in Q3FY22.
Life sciences biz consists of the Acetyl chemistry business.
In Life Science Chemical Segment, co. saw strong performance with healthy demand in domestic as well as in EU market.
Life Sciences Chemical revenue growth was driven by higher prices of Ethyl Acetate and Acetic
Anhydride, particularly from Europe.
Jubilant Ingrevia entered Value added derivative Propionic Anhydride in this quarter. It will go towards import substitution in India.
Number of products in the existing portfolio: 8
Products in Pipeline: 7
Investment to be made between FY21-FY24: 250cr
20 plants across 3 Sites (Multi-location, Multi-plant advantage)
Internal target set by the management of Jubilant Ingrevia
Company wants to achieve a turnover of $1Bn by FY26 i.e. ₹7500cr at the existing exchange rate of ₹75.
And the Trailing 12 month revenue stands at ₹4338cr(Not too far). In the concall the management said that if the current level of pricing continues, the company can achieve the target earlier.
Tracking the company, I can say, excellent & transparent management with a very strong execution capabilities.
Diketene: The much talked about Diketene plant of the company is under commissioning now, and will start commercial production during Q4FY22. This plant will have a capacity of 6000TPA. Diketene demand continues to be very strong in India.
The company will now start working on Phase II of diketene project that will be towards derivatives of Diketene (Margin accretive). Phase II is likely to come in next 9-12 months.
Most of the new CAPEX is towards value added products.
The expected capex cash outflow for the year is expected to be in the range of Rs 300 crore.
As of Feb 4th, 2022, at the price of 592, company's market capitalization stands at ₹9422cr.
The price to sales ratio stood at 2.2x whereas the price to earning is at 20.4x. Very cheaply available at the current performance level, even more so of the given the strong future pipeline of products and capacity addition.