Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jubilant Ingrevia Ltd (BOM:543271, Financial) reported a healthy quarter-on-quarter and year-on-year growth, driven by enhanced performance in specialty chemicals and nutrition, health, and solutions business.
- The company signed a significant five-year contract with a multinational agro-innovator, expected to boost revenue share from its agrichemical CDMO business.
- Jubilant Ingrevia Ltd (BOM:543271) was recognized by the World Economic Forum as a global manufacturing lighthouse, highlighting its advancements in digital transformation and sustainability.
- The company maintained strong market positions, being the global leader in Pyridine & Picoline and among the top two players in food-grade Niacinamide.
- Exports grew by 30% year-over-year, with increased interest from global clients due to the China plus one strategy, reducing reliance on the domestic market.
Negative Points
- The Acetyl business faced pressure due to low demand in the Paracetamol segment, impacting overall performance.
- Despite year-on-year growth, the Chemical Intermediates Business saw a decline in performance due to lower prices.
- Pricing pressure persisted in the Choline segment due to high imports, affecting margins.
- The company anticipates a gradual recovery in the agrochemical sector, indicating ongoing challenges in demand stabilization.
- Significant capital expenditure is required to prepare facilities for new contracts, which may impact short-term financials.
Q & A Highlights
Q: Could you provide some clarity on the $300 million contract? When do you expect this contract to start?
A: The $300 million contract is set over the next five years, with production expected to commence late next calendar year. We need time to prepare our agrochemical plant for this intermediate. (Deepak Jain, CEO & Managing Director)
Q: How much incremental capex will be required for the plant related to the $300 million contract?
A: We will need at least another ₹300 crores over the next 12 to 14 months to modify and extend our existing plant to deliver on this contract. (Deepak Jain, CEO & Managing Director)
Q: Can you elaborate on the new projects you are considering for future capex?
A: Future capex will focus on specialty chemicals and the specialty part of the nutrition segment, particularly for our CDMO business in Agro and Pharma, fine chemicals, and specialty nutrition products. (Deepak Jain, CEO & Managing Director)
Q: What is the current status of the agrochemical sector, and how is it affecting your business?
A: The destocking issue in the agrochemical sector is largely over, and we are seeing volumes return. Pricing is still soft in the broader market, but we are seeing positive traction in our core segments. (Deepak Jain, CEO & Managing Director)
Q: How does the China plus one strategy impact your business?
A: The China plus one strategy is gaining momentum, with many global clients seeking reliable suppliers outside China. This trend is reflected in our new CDMO contracts and increased customer engagement. (Deepak Jain, CEO & Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
