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Anupam Rasayan India Ltd

| Q3 FY26 Earnings Conference Call Transcript

NEUTRAL SENTIMENT

Report Source

⬤15th Dec 25

Summary : Anupam Rasayan's acquisition of Jayhawk Fine Chemicals strategically expands its US presence, diversifies its high-value specialty chemicals portfolio, and is expected to be EPS-accretive.

Management Perspective positive : This acquisition is truly a strategic milestone in their journey and this does strengthen their global specialty footprint. We expect the acquisition to be EPS-accretive from day one. We feel fairly confident that, we'll be able to kind of do this integration also pretty well.

Concall Report Analysis & Insights

Business Overview

  1. Anupam Rasayan acquired 100% equity in Jayhawk Fine Chemicals, a US-based specialty chemicals company.
  2. Jayhawk is a specialized manufacturer with strong capabilities in custom manufacturing and complex chemical synthesis.
  3. The acquisition provides Anupam with a direct onshore manufacturing presence in the United States.
  4. It enhances Anupam's global specialty footprint and strengthens its CDMO platform.
  5. Jayhawk adds high-value di-anhydrides and polyimide intermediates to Anupam's portfolio.

Future Growth Prospects

  1. The acquisition expands access to fast-growing markets like semiconductors, automotive, EV, and aviation.
  2. It enables Anupam to build a global CDMO network for advanced intermediates and API in life sciences.
  3. Leveraging Jayhawk's customer base offers cross-sell potential and deepens existing relationships.
  4. The combined entity aims to create a diversified, multi-geography growth engine.
  5. Jayhawk's pilot-scale infrastructure is critical for new CDMO project development and commercialization.

Management Insights

  1. The acquisition is a significant strategic milestone, strengthening our global specialty footprint.
  2. Jayhawk provides a direct US onshore manufacturing presence, enhancing customer engagement and supply chain resilience.
  3. The transaction is funded through a balanced mix of quasi-equity, debt, and internal accruals.
  4. The acquisition is expected to be EPS-accretive from day one.
  5. We are confident in integrating Jayhawk, leveraging past success with Tanfac acquisition.

Signs of Skepticism

  1. Management did not provide specific growth numbers for Jayhawk post-acquisition, only historical data.
  2. Management dismissed concerns about customer or product concentration risk for the combined entity.
  3. Specific details on the global investment firm providing $110 million in Class B shares were withheld due to confidentiality.

Good To Know

  1. Jayhawk reported approximately USD78 million revenue in CY24 with EBITDA margins around 19%.
  2. The enterprise value of the acquisition is approximately USD134 million, implying a 9x EBITDA multiple.
  3. Total purchase consideration is approximately USD150 million, including USD16 million cash on Jayhawk's balance sheet.
  4. Anupam will invest USD40 million through debt and internal accruals; USD110 million from a global investment firm via Class B non-voting shares.
  5. Jayhawk is owned by CABB, held by Parmira, a private equity fund, which is exiting after seven years.

Key Drivers

  1. US onshore manufacturing expands global reach.
  2. High-value segments drive future growth.
  3. Integrated supply chain enhances customer solutions.
  4. EPS-accretive acquisition boosts financial performance.

Key Analyst Discussions

Market Trends & Consumer Behavior

  1. Customers have shown positive inquiries and excitement about the integrated offering post-acquisition.
  2. The acquisition capitalizes on geopolitical tailwinds like the US Biosecure Act, offering supply chain alternatives.
  3. Management noted the 'China Plus One' factor, but emphasized focusing on internal strengths.
  4. The combined entity advances Anupam's performance material strategy by 5-7 years.

Financial Highlights

  1. Analysts inquired about Jayhawk's growth outlook and potential margin dilution post-acquisition.
  2. Management expects the combined entity to achieve Anupam's historical growth and maintain margins.
  3. Jayhawk's ROC profile was stated to be in the mid-to-higher teens.
  4. The acquisition is expected to be EPS-accretive from day one, with full consolidation of financials.

Product Composition

  1. Jayhawk's revenue is 65% from performance materials, balancing Anupam's agrochem focus.
  2. The combined entity's revenue mix will be 40-45% agrochem, 35% performance material, and 20% personal care/pharma.
  3. Jayhawk adds complex chemistries like Suzuki coupling and high-temperature oxidation, complementing Anupam's strengths.

Strategic Considerations

  1. Analysts questioned the strategic rationale and key synergies of the acquisition.
  2. Management detailed plans for integrating Jayhawk, including leveraging its US presence and R&D capabilities.
  3. The strategy involves scaling existing Jayhawk products and selective capacity expansion.
  4. Anupam aims to be a cost-efficient partner, with Jayhawk closer to US customers.
Anupam Rasayan India Ltd (ANURAS) Concall Report Analysis & Insights | Dhanarthi