Target: ₹713
CMP: ₹793.15
Jubilant Ingrevia is one of the leading players in India supplying chemical intermediates to agrochemical innovators for almost 3 decades. The company is now transitioning to become a CDMO player and has already signed 2 contracts for agro CDMO, one of which is worth $300 million and will start contributing to revenue from Q4FY26. As highlighted in our previous report, 7 more molecules with pyridine chemistry are expected to go off-patent by 2028, thus making Jubilant a good fit to manufacture them.
However, unlike early stage patented molecules, these off-patent molecules face competition from generic manufacturers, leading to price erosion post patent expiry. Jubilant’s entry into CDMO will boost revenue. However, we remain apprehensive about the profitability and RoCE from the CDMO contracts.
The company has invested around ₹1,750 crore in the last 3 years with maximum focus on value added products. We expect revenue to increase here on, but RoCE may remain under pressure if a large part of growth comes from contract manufacturing of off patent products. The stock is trading at 34x FY27E EPS and 17x FY27 EV/EBITDA. Retain Hold rating with revised target price of ₹713.