Jubilant Ingrevia Limited (JUBLINGREA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Jubilant Ingrevia's Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pavleen Taneja, Head of Investor Relations at Jubilant Ingrevia Limited. Thank you, and over to you, sir.

Thank you, Rio. Good evening, everyone. Thank you for joining the Quarter 1 of FY 2027 Earnings Conference Call of Jubilant Ingrevia Limited. I would like to remind you that some of the statements made on the call today could be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release and results presentation that has been shared on our website. On the call today, we have Mr. Shyam Bhartia, Chairman; Mr. Deepak Jain, CEO and Managing Director; and Mr. Varun Gupta, CFO, Jubilant Ingrevia Limited. I now invite Mr. Shyam Bhartia to share his comments.

Thank you, Pavleen. A very good evening to all of you. We are pleased to report a strong start to FY 2027, delivering healthy financial performance in the first quarter. Revenue grew by 25% year-on-year, while EBITDA increased by 36% year-on-year, reflecting the strength of our business model and disciplined execution across operations. Now let me take you through an update on the markets we operate in. Despite continued geopolitical uncertainties in the Middle East, demand across chemical industry has remained resilient. Industry volumes have stayed stable. While pricing has shown a firming trend in the recent weeks, driven by improving consumption dynamics across key customer segments. Pharmaceuticals continued to be a key growth driver for the company, supported by volume growth and sustained demand across markets. We witnessed a stable momentum in the agrochemicals during the quarter, with demand trends showing encouraging signs of recovery across key segments. Healthy export visibility and improving market dynamics have supported recent price increases. The Nutrition and Personal Care market witnessed healthy growth during the quarter, led by higher realizations for niacinamide and choline. At the same time, volumes remained resilient across end-use segments, underscoring stable market demand. We are also seeing a strong traction with customers in electronic semicon segment who are keen to partner with us for integrated opportunities. Now let me share a few details on our future outlook. We are encouraged by the progress of our Pinnacle journey, which is increasingly reflected in our performance through strong revenue and EBITDA growth and a stronger opportunity pipeline. Supported by sustained volume growth and a firmer pricing, we remain confident of continuing our growth momentum. FY 2027, we expect growth to be led by Specialty Chemicals and Nutrition alongside a recovery in acetyls. We anticipate sequential improvement in revenue and EBITDA over the coming quarters. In the new multipurpose -- the new multipurpose plant remains on track for commissioning by the end of current calendar year, further strengthening of our CDMO and Fine Chemicals growth road map. With this, I hand over to Deepak. Thank you.

Thank you, Mr. Bhartia. A very good evening to everyone. We appreciate your participation in the Q1 FY '27 investor call. During the quarter, we continued to advance our strategic priorities while effectively navigating global challenges. Despite disruptions in the Middle East affecting global supply chains and price dynamics, our diversified sourcing capabilities, customer relationships and operational agility enabled strong business performance and effective cost pass-throughs. The strength of our agile operations and execution capabilities during this challenging period is clearly reflected in our strong Q1 performance. Let me share the overall business update for Q1 FY '27 first. Q1 marked a strong start to the year with revenue reaching a 15-quarter high of INR 1,300 crores, up 25% year-on-year, driven by healthy volume growth and improved realizations. EBITDA increased to INR 209 crores, growing 36% year-on-year and 22% sequentially, while PAT stood at INR 106 crores, up 41% year-on-year and 22% quarter-on-quarter. In our Specialty Chemicals business, we delivered revenue of INR 533 crores, up 11% year-on-year and 3% sequentially, supported by steady business volumes and robust growth in Fine Chemicals and CDMO businesses. EBITDA stood at INR 139 crores with margins of 26%, benefiting from improved pricing and a richer product mix led by value-added CDMO and fine chemical offerings. Our pyridine and picoline business delivered steady volumes during the quarter. Despite some pricing pressure in pyridine, cost optimization initiatives helped sustain a healthy performance. Our Fine Chemicals business delivered strong momentum during the quarter. Pyridine and Diketene derivatives recorded healthy volume growth with improved pricing. In Personal Care, we now have over 20 products under development, and we are seeing increasing traction across key Personal Care segments. In Industrials, we continue to strengthen volumes with existing customers while expanding our new customer pipeline. Our CDMO business continues to gain momentum during the quarter. The agro segment benefited from the rollout of big innovator CDMO volumes, while pharma saw strong customer traction and a more than threefold expansion in the pipeline following our U.S. and Europe roadshow. In semiconductors and electronics, we are building a dedicated R&D and clean room facility at our Greater Noida facility, and we are seeing encouraging growth in our opportunity funnel. Our CDMO and Fine Chemicals pipeline continued to show good momentum. We have a funnel of 100-plus molecules with INR 3,500-plus crores of peak revenue potential with now 25-plus confirmed molecules, which will drive our growth in coming years. We added 5 new molecules in the last quarter across pharma, semicon and Personal Care. In our Nutrition & Health segment, the Nutrition segment continued its strong momentum with revenue growing to INR 243 crores, up 36% year-on-year and 6% quarter-on-quarter. We achieved the highest EBITDA in the segment over the last 3 years at INR 36 crores, reflecting a 45% year-on-year and 12% sequential increase, while margins improved to 15%. In Human Nutrition, niacinamide volumes grew steadily, supported by strong pricing across food and cosmetics applications. Choline chloride and CBT pricing also improved on the back of strong customer engagement across key global markets. In premixes, we strengthened our presence with Tier 1 customers in India following the successful integration of Remidex. Our Animal Nutrition business delivered a strong performance, supported by significant pricing improvement. Vitamin B3 volumes remained stable, while pricing improved substantially on both year-on-year and quarter-on-quarter basis. In choline, we maintained our domestic market position and continued to witness healthy demand from Europe alongside improved customer realizations. The premixes business also performed well with volume growth and a favorable product mix driving margin expansion. In Chemical Intermediates business, it saw a strong rebound in Q1 on the back of robust demand and price escalations. Revenue in the segment grew to INR 524 crores, up 38% year-on-year and 21% quarter-on-quarter, driven by strong volume growth and improved realizations, supported by higher input cost pass-throughs. EBITDA for the segment stood at INR 57 crores, up 240% year-on-year and 163% quarter-on-quarter, driven by strong realization gains across the product portfolio and effective cost pass-through. Let me also share a few other critical updates. On the operations and ESG front, we remain firmly on track, targeting INR 100 crores of lean savings in FY '27. We are progressing well on our new MPP plant and advancing our Supernova program with new Gen AI use cases. We successfully cleared over 20 customer quality and EHS audits during the quarter and maintained an exemplary safety record across our manufacturing facilities. From an award and recognition perspective, we achieved several notable milestones during the quarter. We were certified as a Great Place to Work and ranked among the top 50 manufacturing companies for FY '27. On the safety front, our Gajraula facility earned a distinction at the British Safety Council International Safety Awards, while our Bharuch and Nira sites were also recognized at the same prestigious platform. On the M&A front, we successfully completed the integration of Remidex Pharma, and we are witnessing encouraging traction from Tier 1 human nutrition customers. We are also actively evaluating new growth opportunities across high potential segments such as electronics, semiconductors, cosmetics and nutrition. We also hosted a highly interactive Investor and Analyst Day at our Bharuch facility, showcasing our operational strength, pipeline visibility and growth aspirations. Feedback from the investment community was very encouraging with the visit reinforcing confidence in our manufacturing capabilities, operational excellence and expansion potential. Investors also gained deeper conviction in our CDMO growth story, supported by a robust opportunity pipeline and strong commercial traction. With a strong start to FY '27, we are increasingly confident that our Pinnacle strategy is delivering results. We believe this will be a pivotal year in our journey, providing a strong platform to accelerate growth and create greater value in the quarters ahead. We'll now be happy to address any questions that you may have.

[Operator Instructions] The first question is from Siddharth Gadekar from Equirus.

Sir, the first question is on the CDMO contract. So can you give us some sense on what was the contribution on the large CDMO contract this quarter? And if the utilization was lower, was the plant reporting an EBITDA loss this quarter?

So Siddharth, I think we shared some light on that at the plant visit also a couple of weeks back, but the plant has been running absolutely smoothly. We have -- we started the supplies in March and will continue through Q1 and a significant bump in EBITDA of our Specialty Chemicals business is reflected on the back of those volumes. We did not serve the full volumes last quarter as the innovator had confirmed because in between the raw material prices had escalated due to war and the innovator asked us to take a temporary pause till pricing came down. That was the only challenge by and large, except for some small challenges on the operational front. So we did make good positive EBITDA on it, which is reflected in the Q1 numbers.

And how should we think about the full year EBITDA on this contract if the entire volumes do not come?

So as communicated earlier also, we have certain EBITDA expectations on this contract, which I have announced to the markets in the past and on analyst calls in the past as well. We maintain that expectation. We, of course, are in discussions with the innovator on the volume visibility for coming quarters. They are building their scenarios, as I explained a couple of weeks back as well. They have not finalized and hence, I cannot provide any further visibility. But in the unforeseen circumstances of they not giving us any volume, we have full protection, which will more than cover for whatever EBITDA expectations we have communicated to the markets.

Sir, secondly, in terms of -- we have made a comment on the presentation that we will see sequential growth in the coming quarters. Can you highlight what are the drivers for that growth? And secondly, how should one think about the -- spreads in 2Q versus 1Q?

The -- if you see our business, and I think this is not different from what we have been communicating in our Pinnacle strategy, the growth drivers in the business are coming from our fine chemicals business, CDMO business and nutrition business. All three businesses are showing sequential growth in terms of volume as well as portfolio expansion as our pipeline also shows. At the same time, the new plant on niacinamide that we created, we are filling up the capacity very fast. You can see the growth numbers in that business. A lot of it is driven by volume, and we expect to continue on that journey. The plant is already reaching almost 50% plus volumes versus what we had envisaged. And we are hoping in coming quarters, we will be able to take it to the 70% of the peak volumes very soon. So all three businesses are expected to continue to grow in coming quarters. And hence, we are hopeful that as -- and all three are high-margin businesses. So that will give a very strong lift in the positive direction to our EBITDA. On top of that, acetyls or chemical intermediates, as you saw in Q1, has done well, and we are seeing that business continue to do well in current quarter as well, especially on the back of the recent escalations in oil price and the raw material prices. So if that continues, then we should be a sequential improvement in EBITDA coming quarters.

Sir, just last question on the CDMO funnel. Last quarter, we had indicated we had 20 projects with a potential of around INR 1,500 crores peak revenue. That number has increased to 25 projects. Can you give us the peak revenue number for this incremental for the total peak revenue from the CDMO contracts?

Yes. I think so that is a good and valid observation. I think we explained 5 new molecules which we have added. Most of them come from pharma or personal care segment and are early stage. And hence, right now, it is difficult to comment on the peak potential of those new molecules. And hence, we have not updated that INR 1,500 crore number. Obviously, there will be upside coming from them. And as and when we get visibility from our customers on what kind of peak revenue potential exists in them, we will add to the confirmed revenue potential. But those are good early-stage molecules and will obviously take some time to get further visibility on what their peak potential could look like.

The next question is from Abhijit Akella from KIE.

Congrats on much improved numbers. First question is just actually a follow-up on the previous one. So this INR 1,500 crore order book, would it be possible to just break out by end-use industry, what the rough mix is? That was one. And second, when we talk about pharma or personal care, given that these are early-stage molecules, and as you mentioned, it's difficult to quantify the opportunity there. How exactly have we arrived at the peak order value for these? Is it based on some firm contracts from the customer? Or how do we think about it? Because it's difficult to quantify just the requirements at early stages.

Okay. Abhijit, I think -- and this question came, I think, in the last call as well. And I explained that this pipeline, not all molecules in this pipeline are backed up by a multiyear or annual contract. This is based on very custom -- customized set of discussions with the customers where they needed some molecules and we had those chemistries and we created those molecules and started the commercial supplies to them. So we start counting them as confirmed molecule as and when customers start taking first commercial volumes from us, even if it is small quantity, that is point number one. Point number two is, in most of those molecules, customers have given us at least some visibility on what their peak volumes would look like in 2 or 3 or 4 years from now. So we have taken assumptions based on that on what it means for our volumes and our revenues. Number three, a couple of these molecules are very big and are backed up with contracts, including the big CDMO agro molecule that we talked about in response to first question. So obviously, all of that is included in this INR 1,500 crores plus of potential. As I have explained in the past also, if you look at our business mix, we have about 20%, 25% agro, about 30% pharma, about 10% to 15% industrial, 15% nutrition and 10% consumer. The broad mix of these molecules as well as broader pipeline also is reflecting that because when we started this exercise 2 years back and we met customers, we met customers across all segments. Of course the traction is higher in some lower in some like agro right now is going through downturn. We do have molecules, of course, the 2 contracts which we have already announced to the market plus a few more. But the speed at which we are moving in agro is relatively slow versus if I compare it with personal care or pharma pipeline because those segments are still holding up in the market, while agro is recovering gradually and will hopefully start to bounce back in the coming quarters. Hopefully, I answered your question, Abhijit.

Yes. That's helpful. And the second one I just had was we've done INR 209 crores of EBITDA this quarter, and we are talking about sequential growth through the rest of this year. In the context of that, is there any possibility you might want to upgrade your full year guidance of INR 750 crores to INR 800 crores? Would you see upside to that? And just from the standpoint of the segmental drivers, would it be possible to comment on how much of this increase year-on-year would be driven by spec chems and nutrition versus chemical intermediates?

Abhijit, Varun here. Regarding your first point, whether we want to upgrade our guidance, we'd like to stick with the same guidance of INR 750 crores to INR 800 crores. Sequential growth will be there. It will be in the similar range of what we have indicated when we met in the Bharuch a month back of roughly INR 200 crores kind of an EBITDA in the first half will be around INR 400 crores plus. And in terms of the mix, bulk of our EBITDA and revenue growth will be done through specialty and nutrition, which has been continuing in the range of 70% to 80% of our EBITDA mix total. So if you do the math, 20% of total -- 15% of total EBITDA for the quarter or for the year, it will be -- chemical intermediaries will be coming in the similar range of INR 100-odd crores. The rest all will be through specialty and nutrition.

Yes, Abhijit, I think I'll just add one point to what Varun said. The reason we feel hopeful about sequential growth despite the guidance we have given is because we see acetyl doing well and continue to do well in this quarter as well. And on the back of some of the orders we have booked with the customers, we are hopeful that if they materialize in time, we can hopefully beat the target that we have set for ourselves. So that is why there is optimism that we should be able to improve sequentially. But given the volatility which exists in the market, particularly on the Acetyl segment, we never know what happens in Q4. right? So the fundamentals are strong, which make us believe that sequentially will improve. But obviously, there's always a risk if the market go down again in Q3, Q4, then [Technical Difficulty] So that's why we maintain overall guidance at the levels we discussed in...

Got it. Great. Just the last one from my side. I'll step back in the queue after that. Just in terms of the order book and its materialization into revenues, we are aware of the large agro contract, of course. So that's one. But then what about the rest of the portfolio? Could -- how much of a contribution to revenues could that have in this year? And second, from the standpoint of the agro contract itself, should we expect the full annual run rate to be visible this year itself? Or should we wait for that for another year or so?

See, I think based on our earlier calculations and assuming we get full revenue from the big contract as per the agreement with the customer, the confirmed molecules were supposed to contribute at least 25% of our Specialty and Nutrition portfolio together here. Now obviously, we don't have the visibility on the volumes from big contract, depending on where it lands, at least in revenue terms, there could be some adjustment. But in EBITDA terms, we should still be able to maintain what we have committed, as I explained in response to the first question.

The next question is from Nitesh Dhoot from Anand Rathi Institutional Equity.

Congratulations on a good set of numbers. My question is on the Specialty Chemical segment numbers that we see. So the sequential increase there is only about INR 17 crores in sequential revenue increase, and there is no change in EBITDA if you look at the previous quarter. So taking sequential numbers as our new plant got commercialized towards the end of the last quarter. So would that imply that the segment ex of the agro CDMO contract would have seen some revenue decline? And I mean, any pricing or margin pressures there? Or was the CDMO revenue looking -- I mean, CDMO revenue lower than expected there. So could you just clarify.

Yes. So I think the question is valid. And one thing to note is Q4 is always a heavy quarter for us because of the year-end. And what also happens is the customers also slow down their purchase in Q3 because that's year-end for them. They don't want to increase their inventory. So naturally, in Q4, we get benefit from that. So I think from Q4 to Q1, sequential trajectory is not the factor of what is happening in the business. Secondly, of course, given the nature of our business, particularly on the FC side and CDMO side, Fine Chemicals and CDMO side, there are always some orders which can get pushed off by 1 quarter here and there, which I have explained in the past also, which may be some So just keep these two factors in mind. But coming back to the specifics of your question, as you rightly said, the business has grown. The CDMO business has also grown, particularly on the back of the big order. And as I explained in response to one of the questions, we haven't served the full volume in Q1 because customers asked us to delay some of that to Q2 because of the price escalations on raw material side, which hits them than us because we have to -- we pass it on to them. So we took some call there. On rest of the business, the pyridine business is pretty stable in terms of volume because it's a mature business. There was some pressure on pyridine pricing, which might have offset some part of the growth. The Fine Chemical business also is going strong in terms of both volume as well as holding up on the pricing. But because Q4 is a peak year for Fine Chemicals, again, when you compare Q1 to Q4, you will not see that sequential growth. So it's a combination of factors in our portfolio between CDMO business growing, fine chemicals coming out of a strong base quarter and stable, but some price decline. All those forces put together is essentially what is leading to the kind of INR [ 17 ] crore growth that we talked about. The more, I think, right way of doing it is to compare it versus last year, where versus last year, we have increased by almost 11% on specialty on a like-to-like basis. And a significant portion of that growth has come from our fine chemical and CDMO.

Sure, sir. Just one on the confirmed molecule pipeline, the count it has further climbed up to 25. That's roughly 5 per quarter over the last couple of quarters. But the advanced stage bucket...

Sorry, your voice is muffled. We can't hear you clearly.

Is it any better?

Yes, please go ahead now.

Sure. So just checking on the confirmed molecule count that has climbed up steadily in the last couple of quarters, 5 every quarter to 25 now. But the advanced stage bucket, that seems to be static at around 10 molecules for 2 straight quarters. So any color that you would want to give there?

Nitesh, you answered the question. The confirmed moving means advance is also moving, right, if it is remaining at 10. So those 10 molecules at advanced stage are not the same molecules which were 3 months back because some of them have moved to confirmed part of the pipeline and some from rest of the pipeline had moved to the advanced stage pipeline. So the whole funnel is moving. Even the 100-plus molecules that we have mentioned even for this quarter is not the same 100 molecules, which we might have explained or announced 2 quarters back because the fact is some of them drop, some new opportunities come. Our funnel at the top part of it is also improving. I just came back from U.S. last week, met 7 customers. On the back of that itself, there are at least 10 new opportunities we have now, which is not even reflected in the numbers we announced in the last quarter. So it's a moving funnel. Obviously, at the same time, there are some molecules, customers' plans are changing. So they come back and say that we want to put it on that burn. So it's a very dynamic pipeline. Each number, whether at the top of the funnel of 100-plus molecules or the confirmed molecules or advanced, all 3, the composition is changing every month, I would say, not this quarter.