Jubilant Ingrevia Ltd - Jan 2025 Earnings Call Transcript Analysis

February 1, 2025 · 5 min read

Earnings Call Transcript Analysis Report #

Revenue: Q3 FY25 revenue was Rs. 1057 crore, up from Rs. 966 crore in Q3 FY24. This increase is attributed to higher year-on-year revenue from Specialty Chemicals and Nutrition & Health Solutions segments.
EBITDA: Q3 FY25 EBITDA was Rs. 148 crore, a 9% sequential increase and a 42% year-on-year increase. Growth was primarily driven by margin improvements in Specialty Chemicals, better mix, and cost optimization.
Net Debt: As of December 31, 2024, net debt was Rs. 684 crore, with a net debt to EBITDA ratio of 1.36 times (trailing 12 months EBITDA).
Capital Expenditure: Q3 FY25 CAPEX was Rs. 92 crore; YTD (first nine months) CAPEX was Rs. 299 crore, primarily funded through internal accruals.
Net Working Capital: Net working capital percentage to turnover for Q3 was 18.4%, down from 22% in Q3 FY24. Days of working capital reduced to 67 from 80 days in Q3 FY24.
PAT: Q3 FY25 PAT was Rs. 69 crore, up from Rs. 39 crore in Q3 FY24, an 80% year-on-year increase.
Interim Dividend: The board has recommended an interim dividend of 250%, which equates to Rs. 2.5 per equity share with the face value of Re. 1 each for FY25, resulting in a cash outflow of Rs. 39.8 crore.

New cGMP Vitamin B3 Facility: Commissioned a new cGMP compliant vitamin B3 facility in Bharuch, Gujarat, to produce nutraceuticals and dietary active ingredients.
Global Lighthouse Network Award: Received the ‘Global Lighthouse Network Award’ from the World Economic Forum, recognizing the Bharuch facility’s integration of Fourth Industrial Revolution Technologies.
Pinnacle 345 Vision: Committed to growth plans to achieve its “Pinnacle 345 Vision”.
Cost Saving Programs: Key efficiency initiatives delivered substantial annualized savings of over Rs. 120 crore from Surge, Lean, BE and Energy Saving programs. Phase two of the cost program is launching.
Agrochemical Plant Upgrade: CAPEX has commenced for upgrading the existing agrochemical plant to fulfill a five-year agreement with a multinational agro innovator.
Renewable Energy: Targeting to move more than 30% of power requirements to renewables in FY26.

Chemicals Market: Globally, chemicals markets are witnessing gradual volume improvements, but pricing is staying muted in most segments and regions. Expect volume growth to continue, but price recovery may be slow.
Pharmaceutical Market: The pharmaceutical end-use market continues to see steady demand, bolstered by stable pricing and volume placements.
Paracetamol Segment Challenges: Encountering challenges in the Acetyl business due to low demand in the paracetamol segment.
Agrochemical Sector: The agrochemical sector has continued its upward momentum in this quarter, driven by positive volume growth. However, average prices in the sector have remained flat.
Nutrition Market: The Nutrition market experienced a continued resurgence in demand. Niacinamide volumes remained stable with a slight price increase during the quarter. Choline demand saw stronger growth, however, faced pricing pressures from imports.
Market Share in Niacinamide: Maintained top two leadership position in feed grade Niacinamide.
Market share in Choline Chloride: Maintained number one position in the dry Choline chloride market.
Market Share in Acetic Anhydride: Retained market share in the acetic anhydride market while increased shares in both ethyl acetate and acetaldehyde segments.

Low Demand in Paracetamol Segment: Acetic anhydride volumes were muted due to low demand in the paracetamol segment, impacting Chemical Intermediates business.
Pricing Pressure in Chemical Intermediates: Prices in the Chemical Intermediates segment remained under pressure, significantly impacting margins.
Pricing Pressure in Choline Products: Pricing remained under pressure. Expect revenue and margins to increase in coming quarters due to the new cGMP plant commissioning, increasing volumes of food and cosmetic-grade vitamin B3.
Logistics Costs: Higher logistics costs associated with export sales impacted the Chemical Intermediates business.

Overall Business Performance: Anticipate continued improvement, upward momentum and improvement in overall business performance in the ensuing quarters.
Q4 FY25 Outlook: Expect improved sequential performance in Q4 FY25, driven by new plants and operational efficiency.
CAPEX Plans: Plan to announce the launch of more CAPEX projects in line with the long-term growth strategy.
Semiconductor Segment: Hoping to get the first commercial order in FY26. Expect a separate P&L for that business with commercial orders coming in and gradually ramping up.
Renewable Energy: Targeting to move more than 30% of power requirements to renewables in FY26, which will significantly contribute to the reduction of scope 2 emissions and reduce power costs in coming quarters.

Specialty Chemical Margins: Management expects Specialty Chemical margins to remain at least at 23% to 24% EBITDA, even with potential volatility in Pyridine and Beta prices.
Chemical Intermediates Recovery: Expects the Chemical Intermediates business to take a “couple of quarters” for paracetamol problems to resolve and for cost initiatives to take effect.
Vitamin B3 Capacity Utilization: Expects to fill up the capacity of the new vitamin B3 plant in the next 12 to 18 months.
CDMO Contract Milestones: The CDMO agro contract is on track, with milestones being met, and the plant is expected to be commissioned by December or January of the following fiscal year (FY26).
Dividend Policy: Management’s focus is on reinvesting in the business for growth.

Overall Tone: Cautiously optimistic. Management highlights positive performance in Specialty Chemicals and Nutrition, while acknowledging challenges in Chemical Intermediates.
Confidence: Management expresses confidence in the growth trajectory of Specialty Chemicals and Nutrition, supported by new facilities and strategic initiatives. Also confident about achieving “Pinnacle 345” Vision.
Caution: Management acknowledges ongoing challenges in the Chemical Intermediates segment, particularly due to weak demand in the paracetamol market and pricing pressures.
Cost saving: Focus in increasing the profitability of the business via cost-saving initiatives.

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