 "Jubilant Ingrevia hits 52-wk high as arm inks pact with leading agrochem co")
Jubilant Ingrevia share price climbed as much as 8 per cent on Thursday, October 3, to hit a multi-year high of Rs 836.9 per share on BSE.
The stock surged after the specialty chemicals company announced that its subsidiary has inked a pact with a leading agrochemical company. to produce and supply it with an agro-intermediate for one of its key agro chemical products.
At around 11:49 AM, shares of Jubilant Ingrevia were up 7.38 per cent, at Rs 832.4 per share on the BSE. In comparison, the BSE Sensex was trading 1.48 per cent lower at 83,021.85 around the same time.
The stock is trading close to its record high level of Rs 877.95 touched on October 18, 2021. In past eight months, the stock zoomed 96 per cent. At 01:09 pm; Jubilant Ingrevia was quoting 4.5 per cent higher at Rs 809, as compared to 1.7 per cent decline in the BSE Sensex. The average trading volumes on the counter jumped over six-fold with a combined 7.1 million equity shares changed hands on the NSE and BSE.
"We wish to inform you that Jubilant Agro Sciences, a wholly owned subsidiary of the company, has entered into an agreement with a leading Agrochemical Company to produce an Agro Intermediate for one of the key Agro actives of the customer," the company's exchange filing stated.
The filing added that the overall consideration will be paid based on the revenue of more than $300 million in the next few years after the commencement of production. Jubilant Agro Sciences will invest in the manufacturing facility to supply the agro intermediate to the customer.
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As per Jubilant Ingrevia, the customer is a multi billion dollar company. Other details of the company were not revealed in Jubilant's exchange filing.
Jubilant Ingrevia an integrated life science products company, provides innovative solutions to pharmaceutical, nutrition, agrochemical, consumer and industrial customers. The company’s portfolio also extends to custom research and manufacturing for pharmaceutical and agrochemical customers on an exclusive basis.
The company's performance was impacted during FY23-FY24, due to lower realisation in its key pyridine product segment further aggravated by weakness in the nutritional products (NP) segment, impacting the earnings before interest, tax, depreciation and amortisation (Ebitda) and Ebitda margin.
While recovery in the agrochemical segment (contributing 23 per cent to FY24 revenue) is expected from H2FY25-FY26, India Ratings and Research (Ind-Ra) expects healthy capacity utilisation from the ongoing capex, diversification initiatives and calibrated debt-led expansion to lead to healthy credit metrics in the medium-to-long term.
While recovery in the agrochemical segment (contributing 23 per cent to FY24 revenue) is expected from H2FY25-FY26, India Ratings and Research (Ind-Ra) expects healthy capacity utilisation from the ongoing capex, diversification initiatives and calibrated debt-led expansion to lead to healthy credit metrics in the medium-to-long term.
A substantial improvement in the share of high-margin specialty chemicals (SC) and NP segments post the completion of its capex cycle funded through internal accruals, and maintaining of cost leadership through improved levels of vertical integration, will be positive for the ratings, Ind-Ra said in its rating rationale.
Domestic brokerage Nuvama Institutional Equities, meanwhile, had recently raised its target price on Jubilant Ingrevia to Rs 849, from Rs 762 per share, along with retaining its 'Buy' rating on the company.
The brokerage expects Jubilant's earnings before interest, tax, depreciation and amortisation (Ebitda) contribution from its speciality chemicals business to grow from 48 per cent in FY24 to 65 per cent by FY27.
"A likely recovery in the agrochemicals sector, combined with early progress in the diketene business shall drive margins," the report stated.
Further, analysts at the brokerage expect the company to grow in the speciality chemicals segment, as it is already in advanced discussions with customers across the agrochemical, pharmaceutical and semiconductor industries regarding potential custom development and manufacturing (CDMO) opportunities for long-term tie-ups. READ MORE
In the past one year, shares of Jubilant Ingrevia have gained 61.4 per cent, compared to the BSE Sensex's rise of 29 per cent during the same period.