J.G.Chemicals

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.

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.

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.

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.

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.

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.

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.