JUBLINGREA — earnings call

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Prepared remarks

Moderator · Conference Operator

Ladies and gentlemen, good day, and welcome to Jubilant Ingrevia's Q1 FY'26

Questions and answers

Moderator · Conference Operator

Thank you very much.

We will now begin the question-and-answer session.

The first question is from Siddharth Gadekar from Equirus.

Please go ahead.

Siddharth Gadekar

Hi sir, good evening.

So, the first question is on Choline Chloride.

Can you give some sense on with this anti-dumping duty on China, what kind of opportunities this can open for us and what kind of volumes and pricing delta that we can see in this segment?

Deepak Jain

Yes, thank you Siddharth.

That's a good question and definitely an opportunity that we are very excited about.

Choline Chloride, as you may know, is a core product in our portfolio.

We have been doing it for several years now and we are the market leader in India with more than 50% share and we have been exporting it to other markets as well.

Recently, European Union has put a 125% duty on Chinese Choline Chloride, which opens up an opportunity for us.

While we are still getting a sense of the overall market, the initial numbers we have gathered from different sources run into tens of thousands of tons of market in Europe.

We are already working on getting our product ready for European Union and we are hopeful that within the next couple of weeks, our first shipments will go to Europe.

Once the product is accepted by the market, we are hoping we will be able to scale it up.

Like we have created a leadership position for ourselves for Vitamin B3 in the European market, we are hopeful that in Vitamin B4, which is Choline Chloride also in Europe, we will be able to build a leadership position for ourselves in the coming years.

Siddharth Gadekar

Just on the realization difference, what could be the realization difference between India and Europe because of this anti-dumping duty?

Deepak Jain

It's too early to say that, Siddharth.

What we do know is before the duties were put, there was already a premium that European market was paying to Choline Chloride versus what the prices in India are.

With the duties being put, we are hopeful that the premium will only increase.

The exact quantum of that, we will know once we start sending materials to the customers.

We are in touch with the customers, so I don't want to speculate the prices right now, but definitely the realizations will be better than India.

Siddharth Gadekar

Sir, secondly, the multipurpose plant that you spoke about, can you give some sense of what kind of CAPEX that we would be doing for the new multipurpose plant?

Is this for the new customer or contract that we would be looking to sign up?

Or we are just setting up capacities in anticipation of the demand?

Deepak Jain

As I mentioned in my opening remarks, this is a multipurpose plant and that by definition will be serving several product categories in our fine chemicals as well as CDMO portfolio.

Very much similar to the way our seven existing multipurpose plants serve our CDMO and fine chemicals business from Gajraula today.

No, it is not a dedicated plant for any particular contract, but it is in anticipation of the products and the volumes we are expecting in some of our core as well as new product categories in the next year or so.

For most of them, we are already in advanced stages of discussions with the customers and we are building or at least conceptualizing right now the plant in a way that there is enough fungibility in the plant to fit in multiple products as per the need.

And linking it back to the other comment I made in my opening remarks, we are in discussion with our key accounts for almost 70 plus different opportunities and we are hopeful many of them will start materializing in coming quarters.

So, we want to be ready with capacity as we get confirmations from our customers.

Siddharth Gadekar

Okay, sir.

Thank you very much.

Moderator · Conference Operator

Thank you.

The next question is from Pradeep Thakur from Edelweiss Mutual Fund.

Please go ahead.

Pradeep Thakur

Good evening.

Thank you for the opportunity.

My question is, during the recent investor meet, the company had guided the additional Rs.

2000 crore investment that you would have done.

You would reach a peak revenue of Rs.

8000 crore by FY’27.

Does the management still maintain this outlook, sir?

Deepak Jain

So, Pradeep, you are right.

We have invested Rs.

2000 crore and with the dedicated plant that we are building in Bharuch for the big agro contract, that Rs.

2000 crore will get completed later this year.

But the peak potential of that, I think even in the investor day, was not Rs.

8000 crore, but we had said around Rs.

6500 crore depending on the pricing.

And we maintain that view that from today, once all of this CAPEX gets fully utilized and hopefully in FY’27, we will get closer to that number.

But as I mentioned in the investor, a lot depends on pricing as well because in certain segments, pricing is still volatile and has not come back completely.

So, let's see how prices come back.

But we do hope to utilize the capacity built through this Rs.

2000 crore to be almost 70%-80% utilized by end of FY’27.

Pradeep Thakur

All right, sir.

So, my second question is regarding the agro CDMO discussions that the company is engaged in, when can we expect few other agro CDMO contracts to be awarded to us, sir?

Deepak Jain

So, that we are working on them and obviously we announced two last year in October.

There are at least five to six more.

I have been updating all of you in these quarterly calls.

A couple of them are in advanced stages.

It also depends on the global macro environment which has just started to turn around.

So, we are hopeful in coming months or couple of quarters we will get more confirmations.

But we are in constant touch with the customers.

We have sent samples also in couple of them.

So, all of that is on track.

It's hopefully just a matter of time.

Pradeep Thakur

Last question, sir.

Now that you are seeing demand coming back in most of your segments, how confident are you that this demand will not fade away and there would be a meaningful recovery?

Deepak Jain

So, Pradeep, obviously like chemical business goes through cycles and we are coming out of a very deep negative cycle.

And if you look at segment by segment agrochemical volumes, you look at the results of the MNCs as well as our Indian peers, we are seeing improvement in volumes.

In pharma also, there is stability in volumes and prices are holding up.

Nutrition is also by and large holding up the volume.

So, given that, it's been almost 7-8 quarters of low volumes.

Acetyls also by the way, as Varun mentioned in his notes, there is some increase in volumes in the last quarter.

So, we are hopeful that we are coming out of the deep drop we were in.

Obviously, if some other external global event happens or if the tariff situation moves against us, not just as a country but as an industry, then anything can happen.

But at least at this stage, based on the indications we have from our customers, based on the results we are seeing of our peers as well as customers and our own volumes in different segments, we are hopeful that this will be a more sustained recovery.

The pace of which of course varies depending on which segment you're talking about.

Pradeep Thakur

Okay.

Thank you, sir.

Thank you very much.

Moderator · Conference Operator

Thank you.

The next question is from Rohit Nagraj from B&K Securities.

Please go ahead.

Rohit Nagraj

Thanks for the opportunity.

The first question is the 70 molecules pipeline that you talked about.

So, two parts, one is what is the kind of addressable market for these molecules?

And second, is there any particular geography that we are concentrating either in terms of import substitution or maybe certain markets like Europe or so?

So, just a little clarity on this would be helpful.

Thank you.

Deepak Jain

Yes, so I think while I will not give specific numbers, but what I can say is given that these 70 opportunities we have, we have kind of created by engaging deeply with our key accounts, 30-plus key accounts over the last two years, these are reasonably scaled opportunities.

And at an overall level, the overall addressable market will run into thousands of crore.

Now, of course, they are at different stages of maturity in our sales funnel.

I'm hopeful that over a period of time, 70%-80% of that will materialize, but we will see.

As I said earlier, it also depends on a lot of external factors, customers' own plans.

But at this stage, we are quite well poised and we are doing everything from our side to give comfort and confidence to our customers that we are the right partner for these opportunities.

To your second question, the opportunities are spread across the three geographies which I mentioned in my opening comments, which are EU, which has been a traditionally strong market for us, US, where we are focusing very heavily and we have doubled our business in FY’25 versus FY’24, and Japan, where we are relatively new, but we have gotten very good traction in the last one year there and we are getting new opportunities from there as well.

Rohit Nagraj

Thanks.

Sir, second question, in terms of Pyridine Picoline, where we have a global leadership position.

In terms of the pricing, do we not have any material advantage given that we are the largest producer and we can dictate the prices to some extent, similar to what Chinese players usually do?

Do we not have that kind of an advantage here?

If not, what deters us in terms of the pricing volatility?

Is it predominantly demand led or are there any other factors?

Thank you

Deepak Jain

We are the leader, as you rightly said.

We run our plants at 80% capacity utilization in Pyridine and Picoline.

We do have some price advantage, particularly in the US market, where we are sweetly placed vis-a-vis Chinese.

We do get some price premium sometimes in the European market also for specific segments, particularly for Picoline.

But I think that segment is driven more by our scale and cost because we continuously keep working on the cost structure and keep optimizing it and hence our imperative as well as intent there is always to ensure we protect our market share and run our plants at 80% plus utilization.

So, while we do have some power to command premium, particularly in markets like US and for certain specific applications in that segment, our focus is always to maximize our volumes and keep our cost structure linear.

Rohit Nagraj

Sure.

Thanks a lot and all the best, sir.

Moderator · Conference Operator

Thank you.

Next question is from Rohan Mehta from Ficom Family Office.

Please go ahead.

Rohan Mehta

Hello sir.

Thank you so much for the opportunity.

So, I wanted to understand what percentage of ethyl acetate in terms of is part of your chemical intermediates revenue?

That's the first question and secondly, on the entire chemical intermediates space, I think we saw a bounce back in terms of EBITDA margins.

Last quarter, you reported at about 2.5% to 3% margins and this quarter it's been better.

Have you seen that that bottom now has been made and prices can at least stabilize in the interim at these levels?

Deepak Jain

So, to the first question, Rohan, unfortunately, I will not be able to give you specific numbers, but all I would say because we never disclose product-level numbers externally, but what I can say is ethyl acetate is a key product in our portfolio along with acetic anhydride, the two products together form bulk of our acetyl segments and we are pushing hard on both and we have significant share of the market in particularly domestic market for both the products and we intend to protect that position and we have been growing volumes in both in the last few quarters, as I said in my opening remarks.

To the second question, yes, we are hopeful.

Acetyl has gone through a long low cycle now, almost 6 to 8 quarters and we have seen some uptick in volumes, particularly and applications in agro chemicals for acetic anhydride and some of the industrial segments for ethyl acetate, so we are hopeful that volumes will hold up now and as that happens and with all the cost initiatives we have taken to optimize our cost structure for both the products, we hope to continue to be competitive in the market and maintain our share if not grow it further.

And with that, we are hopeful that margins should improve.

Now, of course, that market is volatile so anything can happen within a week's time but looking at the fundamentals, the growth coming back in the key segments of agrochem as I was saying as well as pharma and some of the consumer segments where these two chemicals go, we are hopeful that we have seen the worst and we are coming out of it.

The pace of recovery could be slower than what we have seen in the past for this product at least based on the initial indications that I have heard from our customers but let's see, I think we will have to see for another quarter or two, how this pans out and whether the volumes hold up or not to be able to draw any meaningful conclusion on the long-term trajectory.

Rohan Mehta

My second question is I think one of your domestic competitors in the Acetyl space actually reported worsening EBITDA on this front.

So, I'm just trying to understand was it purely the acetic acid prices which helped you or apart from your lean initiatives was there something more to the margins jumping?

Deepak Jain

See, I will not be able to comment on any other player's performance, but regarding our business it's a combination like I said, our volumes have grown so that has clearly given us the scale.

Our cost initiatives we have been continuously working on so that are helping us as well.

Pricing has been muted in fact sometimes or most times, it has acted negatively especially versus last year.

On a quarter-to-quarter basis, I think it's been pretty stable if I remember correctly.

So, it's largely driven by the volume increase as well as the cost initiatives.

Rohan Mehta

Thank you so much.

Moderator · Conference Operator

Thank you.

Next question is from Junail Shaikh from Awriga Capital.

Please go ahead.

Junail Shaikh

Good evening, Deepak.

Firstly, I'd like to applaud the team for what you guys communicated on Spec Chem and you guys have been very consistent on the profit margins in that division.

My question is on the choline side, as obviously the last four quarters in the nutrition segment, we have been in that Rs.

180-Rs.

185 crore run rate.

I just wanted to see in the short term at least around 12 months out, what can we expect out there?

I know you commented on that, but at least in the next 12 months if you can talk about certain expectations that'll be great.

Deepak Jain

Yes, so nutrition segment there are various forces acting on that portfolio and then part of it, we had explained in our investor day presentation also in February.

So, on one side, we have our core Vitamin B3 portfolio which has both feed and now increasingly growing nonfeed segment which served food and cosmetic segment.

So, for the food and cosmetic segment, we expect that to grow and with the new plant which got commissioned in March and is now stabilizing, we are hoping the growth will accelerate as we fill up that plant with new orders from a couple of marquee customers.

So, hopefully in next couple of quarters, we will see a step change coming from there.

The feed segment has been volatile, those of you who have been tracking us there between price and volume, there is always some volatility but we hope that from a long-term trend perspective, it will stay stable and with the US market opening up for us, particularly for food grade on Niacin, we hope to grow volume significantly there.

The second component of that is our Choline, B4 segment where unfortunately prices have gone down significantly in domestic market, but we have increased the volume significantly versus last year and we are building a specialty portfolio which will again drive growth.

At this stage, we feel the combination of specialty and exports growth which I responded to Siddharth's first question on European, we should be able to grow that portfolio as well.

And third is we have recently started the human nutrition business and the rest should start hopefully to give us some upside in next couple of quarters.

The combined effect of all of that, we are hoping the negative forces which come because of the volatility in the feed segment and prices of chlorine chloride will get more than offset by the growth in our specialty as well as the export growth.

Putting together, we do hope to grow this business at 20%-25% year-on-year, which is what we have communicated in investor day as well.

Junail Shaikh

Thanks Deepak and good luck.

Thank you.

Moderator · Conference Operator

Thank you.

Next question is from Surabhi from NV Alpha.

Please go ahead.

Surabhi

Thanks for the opportunity.

Could you just break down your CDMO pipeline in terms of end-user segments, what proportion would come from pharma versus agro-chem?

Within the pharma segment also, if you could indicate any major therapy areas that you would be contributing to?

Deepak Jain

Surabhi, we have three parts to our CDMO business and some of this information we had shared in our investor day presentation in February which is publicly available including the number of molecules in each of the three sub-segments at that stage.

That will give you a good sense but there are three parts.

There is pharma where as I said in my opening remarks, our funnel has just doubled in the last one year with all the push we have given and mostly we are interacting with innovators and tier 1 CDMOs in Europe and US.

The agro-segment as you would probably know, there are only four or five big customers, we are in touch with all of them and like I said in response to one of the questions, we announced two contracts last year, one of which we served the revenues against it in this quarter and the second one hopefully will start early 2026 and there are another half a dozen which are in various stages of discussions.

Semicon is nascent for us as well as for India as an industry Indian chemical industry, but we have a dozen of semiconductor related CDMO opportunities which most of which we have supplied the samples for and we are hopeful some of them will convert into commercial opportunities, but initially we expect very little revenues from them because these are still early days for semiconductor chemicals for us as well as for the industry and customers are still testing waters here.

Surabhi

Got it.

Thank you.

Moderator · Conference Operator

Thank you.

Next question is from Siddharth Gadekar from Equirus.

Please go ahead.

Siddharth Gadekar

I have one more question on the CAPEX.

So, what sort of projects are in the pipeline currently in terms of the plans that we are likely to put up in this year?

Deepak Jain

So, Siddharth, part of it is the flow over on the Rs.

2000 crore plant we had announced.

So, obviously as I said earlier, there is a big dedicated plant we are creating in Bharuch which will get completed hopefully by end of this year.

That is the major one.

Second is the boiler project which also we are expecting to fire within next month or two.

Thirdly, we have existing multi-purpose plants in both Bharuch and Gajraula which we are debottlenecking and creating at least 15% to 20% additional capacity to serve our immediate requirement.

Fourth is the MPP8 which I mentioned the multi-purpose plant in Gajraula which should, the detailed engineering has already started and we are hoping to start the construction in the next couple of months and on our niacinamide plant also, which we commissioned in March, we are doing some changes to convert it into a multi-purpose plant for the human nutrition segment.

So, these are the four or five major ones and these along with what we have already invested and announced in the past as I was saying earlier, we are hopeful that the target that we have for FY’27 will have enough capacity in our system to serve that.

Siddharth Gadekar

Okay sir, got it.

Thank you.

Moderator · Conference Operator

Thank you.

Next question is from Shreya Banthia from Oaklane Capital Management.

Please go ahead.

Shreya Banthia

Thanks for the opportunity.

As we have reported a strong growth share of the specialty segment, so how do you see these on a sustainable basis, what would be the contribution from the specialty chemicals to the overall EBITDA going forward?

Deepak Jain

Shreya, so specialty segment if you observe, our business over the last eight quarters, it has increased significantly.

Now, Specialty and Nutrition together are close to 90% and Specialty is I think close to 65%-70% plus.

So, we do hope that in steady state even after Acetyls bounces back which we are hoping in next few quarters as we were just discussing, Specialty will be at least at 65%-70% of our overall company level EBITDA.

Shreya Banthia

So, could you give us some sense on the semiconductor opportunity, the molecules that are developing?

Deepak Jain

Yes, so I just responded to the previous question, we have 12 odd molecules in different stages, many of them we have sent samples too and we are hoping they will move into commercial stage in near future even though we don't expect a big impact on revenue coming from these in the next few quarters because these are at least customers in the initial stages.

We are just testing quarters and once they get comfortable, we are hopeful that they will start giving revenues.

Besides that of course, I can't disclose what kind of molecules they are, but these are high value and low volume products and focus on synthesis part of the value chain.

Shreya Banthia

Thank you.

Moderator · Conference Operator

Thank you.

The next question is from Harsh Mehta from Perpetual Capital Advisors.

Please go ahead.

Harsh Mehta

So, my first question was what kind of CAPEX is being done for the CDMO business and in the last call, you had mentioned that majority of CAPEX that I want to understand in the CDMO business, what kind of gross returns to assets, what kind of margins and what kind of working capital cycle will be there for the CDMO business?

Deepak Jain

Harsh, so as we have been saying of the Rs.

2000 crore we invested, 70% of that has gone into specialty and most of it has gone into creating multipurpose plants or dedicated plants to serve our CDMO and Fine Chemicals businesses.

Many of the multipurpose plants are used interchangeably to serve our fine chemicals and CDMO plants.

Now, to the broad sense I can say that at least revenue level, we expect 1.2 to 1.3x at least and sometimes even 1.4 to 1.5x on the revenue to CAPEX ratio.

The rest of it of course, varies so much based on specific products and their profile that it is hard to generalize.

Harsh Mehta

And sir, one more question was that there is a new product that you started to export, if I am not wrong the key ingredient to produce pyronaridine, anti-malarial 44.37, the average revenue per unit for this particular intermediate was $300 plus.

So, I wanted to understand how big can this opportunity be for the company?

Deepak Jain

So, I will neither confirm nor deny what you said.

So, because we never disclose any specific information related to our CDMO products, but what I can say is this product, the one which we have started to export in this quarter, we are hopeful that in next couple of years, the full potential will be at least 4-5x of what we will do this year.

Harsh Mehta

Right, thank you so much.

Moderator · Conference Operator

Thank you very much.

That was the last question.

I would now like to hand the conference over to the management team for closing comments.

Pavleen Taneja

We thank you all for joining this call today.

We hope we have been able to answer your queries.

For further clarification, we would request you to contact me and get in touch with me.

Thank you once again for your interest in Jubilant Ingrevia Limited.

Moderator · Conference Operator

Thank you very much.

On behalf of Jubilant Ingrevia Limited, that concludes the conference.

Thank you for joining us.

Ladies and gentlemen, you may now disconnect your lines.

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