Rakesh Jhunjhunwala portfolio inventory Jubilant Ingrevia (JIL) has tanked 25% to date this yr amid steep market correction. Despite the plunge in share worth, analysts stay bullish on the inventory and see as much as 128% potential rally within the subsequent 12 months. “We believe Jubilant Ingrevia is on the cusp of a transformation with specialty chemicals catalysing overall growth while commodity-led business would keep churning strong cash. At an attractive ~15x FY24E EPS, downside is protected in our view,” Edelweiss Securities mentioned in its newest report. The brokerage agency retains purchase score on the inventory with a goal worth of Rs 1,006, implying 128% potential rally going ahead.
Near-term development: To be powered by new know-how platforms
According to the Edelweiss Securities report, Jubilant Ingrevia has added newer technological platforms in an effort to create advanced merchandise. “The recent addition of di-ketene chemistry further strengthens its position to capture import replacement,” it mentioned. The firm is trying ahead to including newer by-product merchandise throughout each pyridine and di-ketene chemistry bases. Given sturdy traction in demand, the administration has revised its capex steerage for the specialty chemical substances phase. With anticipated capital deployment of Rs 12bn by FY25, JIL expects to attain further income of Rs 25bn.
Long-term development: Focus on CDMO and capability addition
Recently, the corporate was awarded a CDMO challenge price Rs 2.7bn (spanning three years) for manufacturing pharmaceutical intermediates for an MNC. With rising demand from international innovators in addition to new merchandise in its pipeline, the corporate has dedicated cumulative capex of Rs 20bn for FY22–24. “Of this, the specialty segment would account for the highest share—Rs 12.5bn spread over diketene derivatives, agrochemical intermediates, green-field GMP plant for CDMO, investment across fluorination derivatives and agro-actives. Capex of Rs 2bn in Nutrition and Health Solutions is expected to be utilised to enhance products as well as for capacity expansion,” the Edelweiss report acknowledged.
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Stock score: Buy
Target worth: Rs 1,006, Upside: 128%
Edelweiss Securities analysts consider Jubilant Ingrevia is in a transitory part, shifting from commodity to speciality. “Its solid relationships with global pharma and agrochemical leaders and a strong sector tailwind would facilitate growth in agrochemical intermediates/CDMO space. Meanwhile, the commodity chemicals business shall continue to support cash flows.” they mentioned. The brokerage values JIL’s specialty chemical substances enterprise at 25x FY23E EV/EBITDA and commodity enterprise at 10x FY23E EV/EBITDA. The brokerage retains purchase name on the inventory with an SoTP-based goal worth of Rs 1,006.
According to the newest shareholding sample, Big Bull Rajkesh Jhunjhunwala and his spouse Rekha Jhunjhunwala held 4.7 per cent stake on this firm as of 31 March 2022.
Brokerage agency Angel One expects the corporate to publish 18.3% CAGR in revenues, 24.3% in Ebitda and 33.9% CAGR in PAT over FY21-FY23, pushed by sturdy development in life science chemical and specialty chemical enterprise. “Therefore, we believe that there is value in the stock at current levels and hence rate it a ‘buy’ with a price target of Rs 837,” it mentioned.
(The inventory suggestions on this story are by the respective analysis analysts and brokerage corporations. FinancialExpress.com doesn’t bear any duty for his or her funding recommendation. Capital markets investments are topic to guidelines and rules. Please seek the advice of your funding advisor earlier than investing.)