Jubilant Ingrevia Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from Jubilant Ingrevia Ltd (JUBLINGREA) Q3 FY22 Earnings Concall

Management Update:

• JUBLINGREA commented that with its capex plans shaping up, it is on course of doubling the revenue by FY26 from the base of FY21. For FY23 capex is expected to be around INR300 crore.

Q&A Highlights:

• Siddharth from Equirus asked about the impact of the removal of import duty on acetic acid and methanol for the company and the industry. Rajesh Srivastava MD said that in methanol the duty declined from 5% to 2.5% and acetic acid from 7.5% to 5%. This will impact domestic sales, mainly in methanol. But in acetic acid most of the duty that goes down will have less impact as it is passed down to the customer.

• Siddharth from Equirus also enquired about the reason for margin improvement in the nutrition segment in 3Q compared to 2Q and capacity utilization. Rajesh Srivastava MD said that one reason was that the price realization was better and also the volumes were better. On capacity utilization, the company was at 70% last year. In 3Q, the utilization was 80-82%.

• Kaustav Bubna of Rare Enterprises asked about supply situation on global acetic acid plants.  Rajesh Srivastava MD replied that on acetic acid the supply situation has been better during quarter end and hence the prices are getting softer. There is a capacity in China that was not running for long time and has now started and is now releasing some pressure on availability.

• Ranvir Singh from Sunidhi Securities asked if the company is expecting similar kind of EBITDA margin for the full year as in the nine-months. Rajesh Srivastava MD said that committing margin is difficult. However, demand is stable and in pricing there is no challenge and availability also is not an issue in the nutrition business.

• Rohan Gupta from Edelweiss asked that if the company can share the full revenue potential from Diketene at 6,000 tonne Phase 1 plant. Rajesh Srivastava MD said that the company’s both Phase 1 and Phase 2 of Diketene should give the revenue close to INR300 crore combined.

• Prakash Kapadia from Anived Portfolio Management  asked about the dividend payout policy. Prakash Bisht CFO said that the company considers both external and internal factors while deciding the dividend. In internal factors, the company sees what are the growth products and cash flow situation. And in external factors, the company sees the overall environment. Prakash added that the company also looks into profit that needs to get distributed.

• Alisha Mahawla from Envision Capital asked about the reason for growth in the specialty chemical business from 2Q to 3Q. Rajesh Srivastava MD answered that for some of the products demand has increased and there has been some debottlenecking of capacity. Secondly, for the existing products volume requirements increased, while thirdly, it’s the pricing that has been better.