Target: ₹497

CMP: ₹472.35

We hosted a non-deal roadshow of Jubilant Ingrevia. The company appears to be coming out of woods with focus on non-commodity side of the chemicals basket.

Across its three business segments- Chemical Intermediates (CI), Specialty Intermediates (SI) and Nutrition and Health Solutions (NHS), the company is spending ₹1,800 crore of capex out of which ₹1,200 crore is already done. The mantra of +20% for EBITDAM and ROCE for new projects may bode well, provided the company executes well and the demand is favorable.

Deepak Jain, new CEO, who comes from Bain Consulting, where he had a long stint of 19 years. A few initiatives like the actives vertical under SI are his brainchild. His focus on doing away with low margin products like ethyl acetate would be margin accretive in the long run.

We reiterate our Hold rating for the stock valuing the company at ₹497 using SOTP, which implies about 20x PE on FY26 EPS of ₹25.4. While we have assumed slight improvement in EBITDAM for NHS (launch of pre-mixes) and CI (lower overheads due to higher utilisation), we have not assumed any improvement in EBITDAM for SI. However, with launch of diketene derivatives and actives, if the segmental EBITDAM for SI rises to 20 per cent, then the target price would rise to ₹586.