Buy Jubilant Ingrevia; target of Rs 715: Prabhudas Lilladher

Prabhudas Lilladher's research report on Jubilant Ingrevia

We reduce our FY24/25E EBITDA estimate by 18%/13% and EPS estimate by 14%/6% to factor (a) headwinds on global agro chemicals (generics) along with resultant margin pressure in Specialty Chemicals (SPCM) in H1FY24 and (b) spreads normalization in Chemical Intermediates (CI). FY23 has been a challenging year due to non-availability of contracted coal; Nutrition & Health Solutions (NHS) volumes impacted due to avian influenza and CI segment witnessing price correction led by key RM (acetic acid price corrected 40% YoY) and spread normalization. While H1FY24 might remain muted as some of these challenges persist, NHS segment is witnessing healthy volume recovery coupled with improved prices. Acetic anhydride volumes are also improving steadily and CDMO is also seeing strong traction (to aid absorption of new capacities).

Outlook

While we cut our SOTP based TP to Rs715 (earlier Rs810) to factor weak Q4 performance and near term headwinds, we believe with capex outlay and timeline’s intact, aided by healthy OCF’s and a strong Balance Sheet, JUBLINGR is well poised to tap into long term growth opportunities as challenges abate. Reiterate ‘BUY’.

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