Up 73% in 1 year, this midcap stock is SBI Securities' pick of the week; note down 12-month target

SBI Securities has selected a midcap stock as its 'Pick of the Week' with a target price of Rs 817.7 apiece, which translates to a potential upside of 14.3 per cent from its previous close. Having gained about 42 per cent in 2024 so far, the midcap scrip has rewarded investors with a nearly 73 per cent return in the past one year. Many analysts have positive views on the stock citing growth potential, particularly in pharmaceutical and agrochemical segments. 

Any guesses?

Jubilant Ingrevia is SBI Securities' pick of the week with a 'buy' call with its target implying an upside of Rs 103.5 apiece, as of November 4. 

Should you buy Jubilant Ingrevia (JUBLINGREA) shares?

SBI Securities analysts like Jubilant Ingrevia for several aspects including the following: 

Business Outlook

Jubilant Ingrevia expects to finish FY25 with improvements in its overall business, particularly within the specialty chemicals and nutrition and health solutions businesses. "The focus remains on customer-centricity, utlising the newly commissioned plants, enhancing operational efficiency leading to further improvement in margins. It expects a sequential improvement in overall performance in 3Q and 4Q, with 2HFY25 to be even better than 1HFY25," wrote SBI Securities analysts in a research report.

CDMO Segment

Analysts at SBI Securities are positive on Jubilant Ingrevia's Custom Development and Manufacturing Organisations (CDMO) services unit.

In the July-September period, the segment continued to show good traction with customers across the company's pharmaceutical, agrochemicals and semi-conductor segments, leading to a 200 bps expansion in its EBITDA margin to 20 per cent, they wrote. 

Jubilant Ingrevia clinched 13 per cent growth in the CDMO unit driven by an increase in the high-margin fine chemicals pyridine derivatives volumes.

Nutrition and Health Solutions

The brokerage's analysts are also positive on the company's nutrition business. 

The segment clocked an improvement in its margin on the back of higher niacinamide prices, a favourable shift in its volume mix, and lean initiatives as well as optimised input costs, they wrote. 

The analysts have mentioned volatility in acetic acid/ethyl acetate prices and intense competition in newer platforms as well as its CDMO business as key risks to their views. 

Earnings estimate

SBI Securities analysts expect Jubilant Ingrevia to close FY25 with revenue of Rs 4,676.4 crore, which translates to a year-on-year expansion of 13.1 per cent. 

They estimate its EBITDA margin—a key measure of profitability—to improve by 190 bps to 12.2 per cent in FY25, which will be the second highest since 12.3 per cent in FY23. 

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Jubilant Ingrevia Q2 FY25 Results 

Last month, Jubilant Ingrevia (JUBLINGREA) reported a net profit of Rs 59 crore for the July-September period, an increase of 2.6 per cent over the corresponding period a year ago.

Its revenue from operations grew 2.5 per cent to Rs 1,045.2 crore, according to a regulatory filing. 

Jubilant Ingrevia Share | Peer comparison 

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