Axis Securities initiates on Jubilant Ingrevia with 'Buy', sees 21% upside

Axis Securities has initiated coverage on Jubilant Ingrevia, a global integrated life science products and innovative solutions provider, with a ‘Buy’ rating, citing its leadership in Pyridine and Vitamin B3 and a structural shift towards high-margin Speciality Chemicals and CDMO services. 

 

The brokerage noted that with a peak annual revenue potential of ₹1,400 crore from new molecules and the start of a $300 million agro-innovator contract, the company is at a key inflexion point for its next growth phase. It expects the company’s revenue, Ebitda, and PAT to grow at a CAGR of 13 per cent, 20 per cent, and 22 per cent, respectively, over FY25–28E, driven by strategic capex and expansion of its product portfolio. 

 

 

Valuing the company on a sum-of-the-parts (SOTP) basis, Axis Securities has set a target price of ₹800 per share, supported by improving earnings quality, a higher contribution from Speciality Chemicals and CDMO, reduced cyclicality, and a strong return on capital employed (ROCE) trajectory. 

 

The target price implies a potential upside of about 21 per cent from the April 21, 2026, closing level of ₹659 on the NSE.

 

Around 12:35 PM, shares of Jubilant Ingrevia were trading at ₹688, up 4.45 per cent. The stock touched an intraday high of ₹701.90 on the NSE. In comparison, the benchmark NSE Nifty50 was quoting at 24,414.40 levels, down by 162.20 points or 0.66 per cent.   READ STOCK MARKET UPDATES LIVE

Here's why Axis Securities is bullish on Jubilant Ingrevia

Strategic transformation

According to Axis, Jubilant is going through a strategic transformation from a commodity-heavy business to a specialised niche player, aiming to increase the share of speciality products across segments. Under its strategic transformation initiative named ‘Pinnacle345’, the company is aiming for three times revenue growth and four times Ebitda growth in the next 4-5 years or by FY30.

Well-timed capacity addition

Analysts said the company’s strategic shift is supported by around ₹2,000 crore of capex undertaken over the last three years, which has led to the establishment of new multipurpose plants (MPPs) and expansion of Vitamin B3 capacities, positioning it for a multi-year compounding cycle.

 

Additionally, this capacity expansion is timely, as overcapacity in China is showing signs of easing, while the US-India agreement and the EU free trade agreement (FTA) are expected to enhance export competitiveness.

Exponential growth in specialty chemicals

According to Axis Securities, Jubilant Ingrevia is witnessing exponential growth in its Speciality Chemicals business, with the CDMO segment emerging as the key growth driver. The company is expanding its presence across pharmaceuticals, agrochemicals, human nutrition, and high-entry-barrier semiconductor chemicals. Near-term growth is supported by key wins, including a $300 million (around ₹2,500 crore) long-term agrochemical CDMO contract and the onboarding of a patented innovator molecule.

 

The Nutrition segment is also gaining traction, supported by added capacities in high-purity cosmetic-grade niacinamide and choline, with strong customer interest expected to translate into sizeable orders from FY27 onwards.  READ | How to trade Vedanta stock ahead of demerger record date? Analyst decodes 

Analysts noted a strong development pipeline of 16 confirmed molecules and over 100 potential opportunities, representing peak revenue potential of around ₹3,500 crore. With over 70 per cent of near-term pipeline backed by purchase orders and a minimum offtake commitments, CDMO revenues are expected to grow 5x by FY29/30 from the December 2024 base, supporting a strong long-term growth and margin expansion outlook, the brokerage said in its note.

Margin expansion and improving returns

Jubilant Ingrevia has set a threshold margin criterion of 20 per cent Ebitda and return on capital expenditure (ROCE) of over 20 per cent for every new capex, and has aligned its recent capacity additions accordingly. The newer capacities are expected to ramp up steadily over the next two years, contributing high-margin revenues with Ebitda margins close to 20 per cent. Overall, JIL is shifting towards high-margin segments such as Fine Chemicals, CDMO, and specialised Nutrition, and expects margins to improve to the 18–20 per cent range over the next five years, the brokerage said.

 

Additionally, analysts said the company’s capex initiatives are guided by strict profitability and return criteria. As newly commissioned assets ramp up and operating leverage improves, return ratios are expected to expand significantly, with ROCE projected to approach around 15 per cent by FY27–28.

  =======================  (Disclaimer: Views and outlook shared belong to the brokerage/analysts and are not endorsed by Business Standard. Readers' discretion is advised.)