Prabhudas Lilladher's research report on Jubilant Ingrevia
We value the company using SOTP and retain “Hold” rating on the stock valuing it on FY26/27 due to the recent correction in stock price. JUBLINGR completed ~Rs13bn of capex during FY22-24 and is expected to complete another ~Rs7bn within coming months. At 1.3x asset turnover, this could generate a peak incremental revenue of Rs26bn. We forecast a revenue of Rs57bn in FY28E and an EBITDA of Rs7.9bn, implying a blended EBITDAM of 14%. The company recently won a USD300mn multi-year contract for agrochemical intermediates. A detailed look at contract manufacturers, especially in the specialty chemicals segment, suggests that there is very little bargaining power of the suppliers since the buyers are consolidated.
Outlook
Although the recent order win by JUBLINGR could boost revenues for the company, we remain apprehensive of the ROCE that these projects may generate. The stock is trading at 42x FY26E EPS and 21x FY26 EV/EBITDA. Retain “Hold” rating.
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