J.G.Chemicals Q1 FY27 earnings call

J.G.Chemicals Limited reported its best-ever quarterly performance in Q1 FY27, with consolidated revenue from operations reaching ₹315.7 crores, marking a significant 44.8% year-on-year growth and a 10.3% sequential increase over Q4 FY26. The company's EBITDA stood at ₹36.3 crores, achieving an 11.5% margin, an improvement from 10.64% in the corresponding quarter of the previous year. Net profit for the quarter was ₹26.1 crores, with a PAT margin of 8.27%, up from 7.52% in Q1 FY26, driven by strong demand and disciplined execution.

The company is on track to commission its Dahej greenfield plant in Q3 FY27, specifically targeting November 2026. This facility, with Phase 1 capacity of 15,000 to 17,000 tons per annum, is expected to generate ₹300-400 crores in revenue at 11-12% EBITDA margins. Once both phases of the Dahej plant are operational, along with the brownfield expansion at Naidupeta (also commissioning in Q3 FY27 and adding 5,000 tons capacity), JGC's combined zinc chemical capacity will exceed 1,15,000 metric tons per annum, positioning it among the top three global zinc chemical producers. The Dahej project, involving an investment of approximately ₹100 crores, is expected to have a payback period of 3-4 years and an ROCE in the mid-20s.

JGC is actively expanding its product portfolio with new offerings like LabPure zinc oxide for analytical reagents and JG-ZRA, a zinc oxide rubber activator for non-tire applications, which also has export potential. These specialized products are higher margin accretive and are expected to drive the company's overall EBITDA margin to 14-15% going forward^⏳. The contribution from non-rubber segments, which was approximately 18% in Q1 FY27, is anticipated to grow faster than the traditional rubber and tire segments, especially with the Dahej facility strengthening presence in Western India and high-growth non-rubber markets like ceramics, specialty chemicals, pharmaceuticals, and agriculture.

The company continues to emphasize sustainability and innovation. Its Naidupeta facility is the only IATF certified zinc oxide plant with WHO GMP accreditation, providing a significant differentiator for customers, particularly in the tire industry. JGC's recycled rubber project, branded JG TUR, is progressing well, with commercial operations expected within the next 12 months. This project aligns with ESG commitments by offering 100% recycled rubber. The newly inaugurated R&D center at Naidupeta further strengthens product development, polymer testing, and quality enhancement across various end-user industries.

The demand momentum remained robust across end-user applications, particularly in the tire industry. Q1 FY27 saw significant volume growth in passenger vehicles (26.6%), two-wheelers (16.5%), commercial vehicles (16.48%), and three-wheelers (>11%) year-on-year. Despite geopolitical conflicts impacting global supply chains for Zinc Dross, JGC's strong supply chain relationships ensured continuous raw material supply. Management also stated that the company is neutral to zinc price fluctuations, indicating that such volatility does not materially impact their EBITDA margins.

To enhance its global reach and optimize raw material sourcing, JGC proposed the incorporation of BDJ Materials and Metal Trading FZCO in Dubai, UAE. This entity will operate as a step-down wholly-owned subsidiary, focusing on sourcing raw materials and distributing finished goods in the global market. This move is also strategic for the zinc sulphate business, which utilizes zinc oxide byproduct, ensuring circularity and a raw material advantage, particularly as the Dahej plant will facilitate Western India market capture.