Jubilant Ingrevia Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Jubilant Ingrevia Ltd (JUBLINGREA) Q4 FY22 Earnings Concall

Management Update:

• JUBLINGREA said it recorded the highest ever revenue of INR4,949 crore and highest ever EBITDA of INR863 crore in FY22, which is a growth of 42% and 38%, respectively over FY21.

• JUBLINGREA also commented that estimated cash outflow of FY23 will be around INR550 crore and for FY24 and FY25 will be INR650 crore and INR600 crore respectively, which are intended to be funded through internal accrual along with reduction in debt.

Q&A Highlights:

• Rahul Veera of Abakkus Asset asked about the breakup of the INR1,250 crore incremental investment. Shyam Bhartia Chairman replied that specialty chemical is INR750 crore, nutrition and health solution is INR200 crore, and chemical intermediates is INR300 crores.

• Siddharth Gadekar with Equirus asked about the reason for sharp jump in other expenses during 4Q22. Shyam Bhartia Chairman answered that there is one re-class in other expenses. The delta impact of one re-class is about INR10 crores, which was earlier sitting in other expenses which now got shifted to other operating income. Other than that, the increase is due to higher freight expenses and writeoffs.

• Siddharth Gadekar with Equirus also enquired that given acetic acid prices are down vs. 4Q22 avg., if the company would see more inventory loss in 1Q23. Shyam Bhartia Chairman replied that there has not been major changes in acetic acid prices.

• Siddharth Gadekar from Equirus also asked about cost pressure on acetic acid given that crude prices have moved up, does the company feel it is at the bottom in terms of acetic acid prices. Shyam Bhartia Chairman said that acetic acid prices are already at a higher level and they have adjusted to the cost increase in crude and other raw material.

• Rohan Gupta of Edelweiss enquired about the optimism in capex plan of another INR1,200 crore. Shyam Bhartia Chairman answered that this optimism is driven by customer demand. Existing customers asking to develop new products, value addition in existing product range and investment in new platforms that were in R&D which are being implemented one by one.

• Rohan Gupta of Edelweiss asked about how much investment has gone in cash outflow in FY22. Shyam Bhartia Chairman said that FY22 cash outflow is close to INR243 crore. And since most of the capex have been approved during FY22, cash outflow will mainly start happening in FY23.

• Rohan Gupta of Edelweiss asked that going forward with a better product mix, if the percentage margins, which was upwards of 20% can be maintained. Shyam Bhartia Chairman said once the company brings these new capital investments with value-added products, it expects, specifically in specialty chemicals, margins to be improving.

• Dhaval Shah from Svan Investments asked that on the innovation molecule, how much of it would be of specialty chemical business. Shyam Bhartia Chairman clarified that it’s difficult to give revenue numbers. It can be assumed that the growth in the CDMO business is going to be significant in the future.

• Dhaval Shah from Svan Investments asked about the INR9,000 crore revenue target, if it can be achieved by FY27. Prakash Bisht CFO said that it can be achieved as the investments JUBLINGREA is making will be ready by FY25 and it only takes two years to ramp up the facilities.

• Bajrang Bafna with Sunidhi Securities asked if the company is thinking in terms of securing long term supply of ethanol. Shyam Bhartia Chairman clarified that it makes business sense for the company to sell better quality of ethanol it makes for specialized uses at higher margins and consume from import. The company does not need high quality ethanol for internal use.

• Rahul Veera of Abakkus Asset asked about the volume and EBITDA growth expected in the lifescience segment. Shyam Bhartia Chairman said that in FY23 volume will be in a good double digit number. On EBITDA growth it all depends on the market situation.