Revenues and margins peaked out in FY22, due to headwinds in chemical industry which came from – channel de-stocking and China dumping in agro. Also experienced fall in base business of acetic anhydride as volumes and price in end user demand of paracetamol fell. Company remained optimistic about future opportunities and continued with their growth capex, where-in expect to double their gross block by FY25 (FY21 asset base of Rs. 1900 Cr). All the incremental capex going within speciality chemicals, nutraceutical (animal & food grade) and CDMO (GMP facility); these would have margins north of 20% and for which managment has an internal hurdle rate of 20% ROCE.
They have announced a 3,4,5 strategy which targets; 3x revenue, 4x EBITDA in 5 years.
Business segments and their competence
Business has been able to command market leadership in their product lines –
- Speciality Chemicals – Top 2 globally in Pyridine + Beta, while being #1 in 18 Pyridine Derivatives.
- Nutrition & Health Solutions – Global top 2 in Vitamin B3 and Domestic leader in Vitamin B4 (Feed)
- Chemical Intermediates – No 2 in Acetic Anhydride merchant Mkt and No.1 in India.
Having said that the business experienced a downturn last two years in line with the industry, due to channel de-stocking by agchem players and dumping of chemicals from China. This led to both volume de-growth and prices tumbling.
The business is completely integrated forward and backward within this value chain, and claims to be the only player which is present through-out the supply chain. Verified this through google search, and they come out amongst top global companies in Pyridine and it’s value chain. The integration mush help them build cost efficiencies. They also mentioned in Q4FY22, that they can beat China in global Pyridine market.
It is believed prices in China have dropped below sustainable levels and some companies are folding up due to the same. They have started re-gaining volumes in most of their product categories. Prices have found a bottom, but pricing power still remains missing.
Jubilant Ingrevia’s largest competitor in Pyridine, Vertellus (USA) has shut shop. According to Vertellus website, they were the world’s largest pyridine producer. Another large Pyridine manufacturer is the Red Sun group in China. Together the three of them (Jubilant Ingrevia included) controlled half of global capacity in 2018. In Europe for Pyridine derivative they had no competition.
Equirus said that the recent channel checks indicated rising Niacinamide prices driven by higher pyridine costs. This, they believe, will boost near-term profitability in both specialty and nutrition segments.
21/06/24
New CEO, New Vision of Pinnacle 345 i.e. 3 times Revenue, 4 times EBIDTA, in 5 year Horizon
@ Market Cap of Rs. 9000 Cr
Started tracking the business since the New CEO took over in Oct 2023. The company is currently under going a transformational journey – has professionalised their board, shifted focus to downstream value added products (in agro, cosmetic and food grade), along with CDMO opportunities within this space and developing newer chemistry platforms (like Diketene and forward integrating into value added derivatives, while within Pyridine developing fluorinated derivatives and entering the niche agro actives market)
Guidance
since FY21 guiding product mix shift.. 65% specchem + nutra and 45% Int
New strategy 3.4.5 in line with the above guidance.. Increased focus on value added, GMP non-GMP products, CDMO opportunities within pharma and agro, as well as human and cosmetic grade butraceuticals.
focus towards higher margin products Developed a New diketene platform