Jubilant Ingrevia (JIL), a part of Jhunjhunwala’s portfolio, has recovered nearly 35 per cent from its March low of Rs 401.35, even as the scrip is still down 30 per cent from its 52-week high of Rs 818.50 level.
Brokerages essentially have maintained a bullish view on the stock, given the company’s new product pipeline and strong traction in the contract development and manufacturing organisation (CDMO) segment. Prabhudas Lilladher has a target of Rs 860 on the stock, suggesting an upside potential of 58 per cent on the counter.
Currently, the stock is trading at a P/E multiple of 10.6 times FY24 EPS, which is at a significant discount to other chemical companies, said Angel One. This brokerage sees value in the stock at Rs 700 apiece.
On Wednesday, the scrip was trading at Rs 541.45, down 0.4 per cent.
Jubilant Ingrevia, PL said, is well placed to capitalise on the long-term growth opportunities, given the new products pipeline, strong traction in CDMO, import substitution, China+1 policy and commensurate capex outlay of Rs 2,050 crore over FY22-25.
It said that the speciality chemicals (SPCM) segment will lead to earnings growth, aided by the highest capital allocation. Jubilant Ingrevia’s vertical integration across the value chain drives cost and market leadership, PL said. It also enables Jubilant Ingrevia to move up the value chain, PL added
“Strong balance sheet despite Rs 1,800 crore cash outflow on capex over FY23-25E and earnings mix improvement led by higher value and structural growth segments will drive rerating in the stock, in our view,” the domestic brokerage said.
Jubilant Ingrevia derives 56 per cent of its revenues from the life science chemicals division while the speciality chemicals and nutrition and health solution business account for 28 per cent and 15 per cent of revenues, respectively.
Jubilant Ingrevia was formed by spinning off the chemical and life science ingredients of Jubilant Life Sciences Ltd. The company has a vast array of products across its three divisions and is one of the top two producers of Pyridine – Beta and vitamin B3 globally.
Late investor Rakesh Jhunjhunwala and his better wife Rekha Jhunjhunwala held 4.7 per cent stake in the company as of June 30.