J.G.Chemicals Limited — Q1 FY26 earnings call

Call held 12 Aug 2025

Management summary

J.G.Chemicals reported Q1 FY26 consolidated revenue of INR 221.4 crores, with EBITDA at INR 23.2 crores and PAT at INR 16.35 crores. The company announced a significant Greenfield CAPEX of INR 100 crores for a new 40,000 MTPA facility in Dahej, Gujarat, aiming to boost non-rubber segment revenue share from 15% to over 30% and improve EBITDA margins by 200-300 bps over the next few years. Management expressed confidence in continued double-digit volume growth and strong demand across its diversified end-user industries.

Highlights

  • Consolidated total revenues for Q1 FY26 stood at INR 221.4 crores.

  • EBITDA for Q1 FY26 was INR 23.2 crores, and PAT was INR 16.35 crores.

  • Greenfield CAPEX of INR 100 crores approved for a 40,000 MTPA facility in Dahej, Gujarat, with potential to generate INR 900 crores in revenue.

  • Target to increase non-rubber product share from 15% to over 30% in 4-5 years.

  • Expectation of EBITDA margin increase by 200-300 basis points over the next few years.

  • Strong demand across all end-user industries and favorable monsoon outlook.

Concerns

  • Raw material cost as a percentage of revenues increased slightly in Q1 FY26 due to dynamic market conditions and lead/lag effects from imports.

  • Global tariff wars and volatility in commodity prices can have short-term impacts on the business, though they tend to average out long-term.

Key financials

  1. Consolidated Revenue ₹221.4 Cr
  2. EBITDA ₹23.2 Cr
  3. PAT ₹16.35 Cr

What they filed

Q1 FY27: revenue up 45.0%, net profit up 62.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue212 209 224 218 220 +4%248 +19%286 +28%316 +45%
EBITDA21 23 19 20 18 −14%23 +0%21 +11%34 +70%
Net profit17 18 16 16 15 −12%18 +0%19 +19%26 +63%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹100 Cr fully funded through internal accruals
    • 40,000 metric ton per annum Zinc chemicals facility at Dahej, Gujarat ₹100 Cr
    • Future Brownfield expansion into advanced recycling products at Naidupeta
    I am pleased to share with you that yesterday our Board has approved the Greenfield capital expenditure of approximately INR 100 crores fully funded through internal accruals for a 40,000 metric ton per annum Zinc chemicals facility at Dahej, Gujarat.
  • Liquidity Liquidity disclosed Company is fairly cash-rich at the moment.
    At the moment, we have no such plans. The Company is fairly cash-rich at the moment.

Guidance & targets

Market Share

  • Non-rubber products share Market Share · next four to five years · High confidence over 30%

    From 15% today

    We intend to expand our presence very aggressively into the non-rubber market also and expect to increase the share of non-rubber products from the current 15% to over 30% over the next four to five years.

    — Anirudh Jhunjhunwala

  • Ceramics market share Market Share · sometime next year (when Gujarat CAPEX operational) · High confidence at least 15% to 20%

    From very low today

    With our Gujarat CAPEX coming into stream and the plant becoming operational sometime next year, we hope to capture at least 15% to 20% of the market share in this segment.

    — Anirudh Jhunjhunwala

Volume

  • Tyre industry growth Volume · next few years · High confidence double-digit growth
    the tyre industry is actually expecting a double-digit growth over the next few years.

    — Anirudh Jhunjhunwala

  • Ceramics market growth Volume · next few years · High confidence double digits
    This industry, we expect, should grow well in double digits in India over the next few years due to a sharp rise in housing market and exports of ceramic products from India.

    — Anirudh Jhunjhunwala

  • Consolidated volume growth Volume · current fiscal · High confidence double-digit volume growth
    as a Company, we have always maintained our objective to have double-digit volume growth on a consolidated level, which is what we have been able to achieve in the last fiscal, and which is what we aspire to achieve in the current fiscal as well.

    — Anirudh Jhunjhunwala

Profitability

  • EBITDA margin Profitability · next few years · High confidence increase by 200 to 300 basis points

    From 10% to 11% today

    We expect that the EBITDA margin should increase by 200 to 300 basis points over the next few years.

    — Anuj Jhunjhunwala

Capex

  • Payback time for CAPEX Capex · High confidence about four years
    So, see, internally we have always targeted a payback of about four years, and we expect that we should be able to achieve that for this project also. Give or take a couple of quarters.

    — Anuj Jhunjhunwala

  • INR 100 crores CAPEX completion Capex · next three to four years · High confidence next three to four years
    So, we expect that this entire CAPEX of INR 100 crores should be done in the next three to four years.

    — Anirudh Jhunjhunwala

Capacity

  • Total Zinc chemicals installed capacity Capacity · after entire capital expenditure program is completed · High confidence about 1,10,000 metric tons

    From 70,000 metric tons today

    So, after the entire capital expenditure program is completed, we expect that the installed capacity of both the existing units and the Gujarat plant, basis the plans that we have today, would be about 1,10,000 metric tons of Zinc chemicals.

    — Anirudh Jhunjhunwala

Revenue

  • New rubber chemical contribution to revenue Revenue · from next year · Medium confidence roughly about 10%
    In terms of how much contribution to revenue, will it be like 10%, 5% broad figure? Anirudh Jhunjhunwala: Yes, roughly about 10%.

    — Anirudh Jhunjhunwala

  • Revenue doubling Revenue · every three years to four years · High confidence double our revenues
    So, you see, we have always mentioned that our target is to double our revenues every three years to four years.

    — Anuj Jhunjhunwala

What to watch in Q2 FY26

Progress of Dahej Greenfield CAPEX

next quarter
Current Board approved, land acquired, first phase construction to start
Target Updates on construction progress and commissioning timeline for the first phase

Why it matters

This is a major expansion project expected to significantly boost revenue and market share in non-rubber segments.

I am pleased to share with you that yesterday our Board has approved the Greenfield capital expenditure of approximately INR 100 crores fully funded through internal accruals for a 40,000 metric ton per annum Zinc chemicals facility at Dahej, Gujarat. ... So, the first phase would start, the construction of the first phase would start now.

Risks & concerns

  • Volatility from global tariff wars and commodity prices

    medium

    Such wild swings in prices sometimes do have a short-term impact on the business, but over the long term and medium term, these average out.

    Management acknowledged

  • Impact of sharp movements in Zinc prices on inventory

    medium

    If there is sharp movements in Zinc prices, that inventory takes a knock and could affect quarterly performance, though the business is naturally hedged.

    Management acknowledged

  • Working capital intensive business as an entry barrier

    low

    The business is working capital heavy with a cycle of about three months, which acts as a significant barrier to entry for new players.

    Management acknowledged

Q&A highlights

8 direct
Complexity of handling scrap and proprietary technology Direct
So, as the name suggests, it is a scrap. So, whenever you are dealing with the scrap, it is not homogenous, it is not uniform, and it is not similar from each plant. The name scrap itself means that it is different kinds. There are various shapes, sizes, purity, impurity levels, etc. in these scraps. Now, to handle scrap, to manufacture grades, which are highly pure and also with low levels of impurity, you need a technology which is Intellectual Property to the Company which it has developed over the last two decades.

Highlights the company's competitive advantage and entry barrier through proprietary technology in scrap recycling for high-purity Zinc oxide.

Asked by Rajvi Shah

Impact of tariffs on business Direct
So, generally speaking, we do not have any direct impact of tariffs because our sales to the U.S. is next to negligible, almost zero. And the duty structure, the tariffs have not impacted the duty structure on the scraps that we import from U.S. So, speaking generally, there is no impact of duty of these tariffs on our industry.

Clarifies that the company is largely insulated from direct tariff impacts, though global volatility can have short-term effects.

Asked by Rajvi Shah

Revenue generation potential from new CAPEX Direct
Sir, with INR 100 crores of CAPEX, we will be able to do incrementally roughly INR 900 crores of revenue. That is like 9x turnover, asset turnover. Is that right? Anuj Jhunjhunwala: Absolutely.

Reveals a very high asset turnover ratio (9x) for the new Greenfield CAPEX, indicating efficient capital deployment and strong revenue potential.

Asked by Akshada Deo

EBITDA margin improvement from new CAPEX Direct
So, what Anuj was just mentioning is that the blended EBITDA is expected to improve by 200 to 300 points. This is because, obviously, some other grades, which may be slightly low in volumes, but the EBITDA accreditation in those grades would be much higher.

Explains the mechanism for margin expansion, driven by higher-margin specialized grades despite potentially lower volumes for some products.

Asked by Akshada Deo

Capacity utilization levels Direct
Utilization levels, approximately, we operate at 70% of achievable capacity. Historically, also, we like to do that. You must appreciate that our plant deals with scrap and we make more than 80 grades of Zinc oxide. So, the installed capacity is one side of the picture. What is more important is what is the achievable capacity to run the plant efficiently and economically.

Provides insight into operational efficiency and the complexity of managing capacity with diverse scrap inputs and multiple product grades.

Asked by Romil

Impact of Zinc price variability on margins Direct
You know, our business, as Anuj had just explained a while back, is almost a natural hedge as far as Zinc prices are concerned. So, we are buying on the same benchmark index and we are selling on the same benchmark index. So, there is an alignment of quantities on the buying side and the sales side. So, technically, it is a natural hedge. But you would appreciate that any business carries an inventory, which is almost a perpetual inventory. So, if there is sharp movements in Zinc prices, that inventory takes a knock and you could see the effect of that on the quarter's performance.

Clarifies the natural hedging mechanism against Zinc price volatility but acknowledges short-term inventory valuation impacts from sharp price movements.

Asked by Gaurav Gupta

Competition in the ceramic market and company's strategy Direct
Now, coming to the second part of your question, wherein some ceramic manufacturers have in-house processing of Zinc oxide, that is not a major concern for us because there is only a couple of them who have that. And as per our reports, one of them have already kind of disassociated with the internal manufacturing. Now there is another one or two which is left, maybe. Going forward, this will not be possible because of the sheer scale and size.

Addresses concerns about competition in the ceramic segment, highlighting the company's scale and cost advantage in processing scrap as a key differentiator.

Asked by Ratish Patel

China's capacity and lack of dumping in Zinc oxide Direct
So, given that the mother index is the LME for both India as well as China and all other geographies, so there is no competitive edge which China has vis-à-vis any Indian producer or any other producer from any other country. So, that is why, if you see, this product, even our exports are hardly 10% to 15%. And we have always guided that we don't expect this to increase to a much higher or a very substantial number going forward.

Explains why China does not have a competitive advantage for dumping Zinc oxide due to LME price linkage, providing comfort on import competition.

Asked by Radha

3 min read 7 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

J.G.Chemicals reported a consolidated total revenue of INR 221.4 crores for the first quarter ended June 30, 2025. The company achieved an EBITDA of INR 23.2 crores and a Profit After Tax (PAT) of INR 16.35 crores. Management noted that revenues grew year-on-year, characterizing the quarter as a consolidation phase after a robust previous year, with expectations for similar growth momentum in the coming quarters.

Strategic Greenfield Expansion in Dahej, Gujarat

The Board has approved a Greenfield capital expenditure of approximately INR 100 crores for a new Zinc chemicals facility in Dahej, Gujarat. This facility will have a capacity of 40,000 metric tons per annum and is projected to generate INR 900 crores in revenue. The CAPEX, which includes land acquisition, will be fully funded through internal accruals and is planned to be executed in two phases over the next three to four years, aiming for a payback period of about four years.

Non-Rubber Market Expansion and Product Diversification

J.G.Chemicals aims to aggressively expand its presence in the non-rubber market, targeting an increase in the share of non-rubber products from the current 15% to over 30% within the next four to five years. This diversification will focus on ceramics, specialty chemicals, pharmaceuticals, cosmetics, agriculture, and the electronic segment. The new Dahej facility will be crucial for catering to these specialty segments and increasing market share, particularly in ceramics where the company targets 15-20% share.

Tyre and Ceramic Market Outlook

The company anticipates double-digit growth in the tyre industry over the next few years, driven by India's growing exports and the structural shift in manufacturing towards cost-efficient regions. The ceramics market, estimated at 25,000 to 30,000 metric tons per annum, is also expected to grow in double digits due to a rise in housing and exports. J.G.Chemicals, already a leader in the tyre segment, plans to significantly increase its presence in ceramics with the new Dahej plant.

Raw Material Pricing and Margin Stability

The pricing model for Zinc scrap and Zinc oxide is directly linked to the London Metal Exchange (LME), providing a natural hedge against price fluctuations. While raw material costs as a percentage of revenues saw a slight increase in Q1 FY26 due to dynamic market conditions and import lead/lag effects, the company expects its core manufacturing EBITDA margins to remain in the 10-11% range long-term. Management projects an overall EBITDA margin improvement of 200-300 basis points over the next few years, driven by a shift towards higher-margin specialized grades.

Technology and Recycling Leadership

J.G.Chemicals emphasizes its proprietary technology developed over two decades for recycling diverse Zinc scrap into over 80 specialized grades of Zinc oxide. This capability, which allows the company to produce high-purity products from varied scrap, acts as a significant entry barrier for competitors. The company's scale as one of the largest Zinc scrap buyers globally further enhances its ability to blend materials and optimize production, reinforcing its leadership in sustainable Zinc recycling.

IPO Proceeds Utilization and Future Funding

Approximately INR 45 crores from the IPO proceeds are yet to be utilized, in line with the utilization program shared during the prospectus. Management stated that the company is currently cash-rich and has no immediate plans for further fundraising activities like QIP or rights issues. However, they remain open to exploring such options if a need arises in the future.

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