CRISIL said that the rating continues to reflect the healthy business risk profile of JVL, supported by its leading market position across most products, vertically integrated operations, and diversified revenue profile across business segments, geographies and end-user industries; the rating also factors in the company's healthy financial risk profile.

These strengths are partially offset by moderately large working capital requirement and exposure to fluctuations in input prices as well as government policies.

Operating performance weakened in fiscal 2023, with revenues declining by 4% on-year to Rs. 4,773 crore, mainly due to weak demand in the nutrition and health solutions (NHS) segment due to the impact of avian and swine flu in certain key markets as well as fall in realisations in the NHS and chemical intermediates (CI) segments; while specialty chemicals (SC) segment grew at a healthy rate.

For the first quarter of fiscal 2024, while performance of the NHS segment has improved, overall revenues declined 8% year-on-year due to lower demand from the agrochemical customers of the SC segment. However, CRISIL ratings expects the revenues to recover during the second half fiscal 2024.

Over the medium term, business prospects continue to remain comfortable with an annual revenue growth of 8-10% expected, supported by addition of new value-added products and the company's capacity expansion plans across the business segments.

Operating margins declined to 11.5% in fiscal 2023 from 17.0% in fiscal 2022 due to sharp increase in the power and fuel cost (formed ~15% of the revenue in fiscal 2023).

While operating margin remained low in the first quarter of fiscal 2024, it is expected to improve to 13-15% going forward driven by lower fuel cost and improved operating performance in the NHS segment.

The financial risk profile remains comfortable, with a healthy networth of Rs 2,652 crore and gross debt of Rs 397 crore as on March 31, 2023. Debt protection metrics remained healthy with interest coverage of 26.9 times and net debt to earnings before interest, taxes, depreciation and amortisation (Ebitda) of 0.6 times in fiscal 2023.

Financial profile is expected to remain stable over the medium term even after factoring in sizeable ongoing and planned capex over fiscals 2024 and 2025, which is to be funded prudently through mix of debt and internal accruals.

Jubilant Ingrevia is a global integrated life science products and innovative solutions provider serving pharmaceutical, nutrition, agrochemical and industrial clients with customised products and solutions that are cost effective and conform to premium quality standards.

The company reported 27.45% fall in consolidated net profit to Rs 57.59 crore on a 7.83% fall in sales to Rs 1,068.66 crore in Q1 FY24 over Q1 FY23.

The scrip rose 0.24% to currently trade at Rs 519 on the BSE.