Can Jubilant Ingrevia sustain its recovery after recent challenges?

ET Intelligence Group: Shares of Jubilant Ingrevia, manufacturer of chemicals and nutrition products, have staged a marginal recovery since the middle of August, gaining 5% after losing as much as 14% in the previous two weeks following the company's muted year-on-year revenue growth in the June quarter.

The company is back on investors' radar given that it earns 56% revenue from domestic operations while export to the US is limited to 10% of the top line thereby limiting the impact of the punitive US tariffs. In addition, the European Union's decision in July to impose anti-dumping duty on Chinese supply of choline chloride (vitamin B4) augurs well for the company, which has over 50% market share in India.

The company expects growth to continue driven by capital expenditure (capex) meant to expand production capacity, opportunities in the agriculture sector and higher potential to export to Europe. Of the total capex of ₹600 crore earmarked for FY26, the company spent ₹54 crore in the June quarter.

Specialty chemicals contribute 46% to the company's total revenue, followed by chemical intermediaries at 37% and nutrition products at 17%.

According to the management, after six to eight weak quarters, the business has started showing volume uptick in key segments like agrochemicals, pharma, and consumer products. With cost optimisation measures in place, the company expects margins to improve.

"As part of our Lean 2.0 cost optimisation programme, we have set a target of achieving annualised savings exceeding ₹100+ crore in FY26, and have progressed well in Q1," said Deepak Jain, managing director, Jubilant Ingrevia during an earnings call.

The company expects higher exports of choline chloride to Europe. Recently, the European Union imposed a 120% duty on Chinese choline chloride, creating a significant opportunity for the company.

Existing multi-purpose plants at Bharuch and Gajraula (in Uttar Pradesh) will have 15-20% additional capacity. Construction of a new multi-purpose plant at Gajraula will begin in the coming months.

It is designed to serve several product categories in fine chemicals and CDMO (contract development and manufacturing organisation), with flexibility to handle multiple products.

Equirus Securities expects 34% annual growth in operating margin before depreciation and amortisation (Ebitda margin) Between FY25 and FY28, supported by scale-up of CDMO contracts and ramp-up in fine chemicals and nutrition.