Rajkesh Jhunjhunwala and his wife Rekha Jhunjhunwala held 4.7 per cent stake in Jubilant Ingrevia as of March 31, The investment is worth Rs 326 crore.
Edelweiss has recommended a buy of the stock of Jubilant Ingrevia for the target price of Rs Rs 1,006, which is a potential gain of 140 per cent, the ET disclosed.
Jubilant Ingrevia was formed by spinning off the chemical and life science ingredients businesses of Jubilant. The company has three business verticals – specialty chemicals, nutrition and health business, and life science chemicals. It derives 50 per cent of its revenues from the life science chemicals division while the specialty chemicals and nutrition and health solution business account for 32 per cent and 18 per cent of revenues, respectively. It is one of the top two producers of Pyridine – Beta and vitamin B3 globally.
The company management is confident of doubling revenue in three-four years on the back of capex. With speciality chemicals potentially driving a large part of this growth, overall Ebitda margin and RoCE is seen improving. The company’s balance sheet is expected to stay strong since a large part of this capex would be funded from internal cash flows, Edelweiss said in the research report.
It also said the company’s near-term growth will be powered by new technology platforms. It noted that the company JIL has added newer technological platforms for creating complex products. The recent addition of di-ketene chemistry further strengthens its position to capture import replacement. The company is looking forward to adding newer derivative products across both pyridine and di-ketene chemistry bases.
Jubilant Ingrevia’s management has revised its capex guidance for the specialty chemicals segment in view of the strong traction in demand. The expected capital deployment is Rs 1,200 crore by FY25 and the expected additional revenue is Rs 2,500 crore.
“We believe Jubilant Ingrevia is at the cusp of a transformation with specialty chemicals catalysing overall growth while commodity-led business would keep churning strong cash. At an attractive 15 times FY24E EPS, downside is protected in our view; retain ‘buy’ with a target of Rs 1,006,” it said.