J.G.Chemicals

J.G.Chemicals reported a consolidated revenue from operations of ₹220 crores for Q2 FY26, marking a 4% year-on-year growth. The EBITDA for the quarter stood at ₹21.9 crores, resulting in an EBITDA margin of 9.94%. Profit after tax for Q2 was ₹15 crores, with a PAT margin of 6.81%. For the first half of FY26, consolidated revenue reached ₹438 crores, a 6% YoY growth, with EBITDA at ₹45 crores (10.29% margin) and PAT at ₹31 crores (7.16% margin). The marginal decline in Q2 EBITDA margin was attributed to higher cost inventory from shipping delays, which is expected to normalize.

The company's significant Dahej greenfield expansion, a 40,000 metric tons per annum zinc chemical facility, is progressing as planned. Phase-1 of this project is anticipated to be commissioned in H1 FY27. The total project outlay for both phases is ₹100 crores, with approximately ₹25-26 crores already spent on land acquisition. Once stabilized, the Dahej plant is projected to generate over ₹900 crores in revenue, significantly strengthening the company's presence in Western India and expanding its reach into ceramic, specialty chemical, agro, and tyre businesses.

J.G.Chemicals is strategically expanding into non-rubber applications, aiming to increase their share from the current 15% to over 30% in the next four to five years. These applications, including pharmaceuticals, cosmetics, ceramics, and specialty chemicals, offer higher EBITDA margins. The company is also developing a new recycled rubber product, with trials expected to begin in Q4. This product targets a usage of approximately 15% in tyres, significantly higher than the 3-4% for traditional reclaimed rubber, aligning with industry demand for increased recyclable content.

Management anticipates a robust growth of 7-8% in the tyre industry over the next couple of years, driven by overall economic growth and significant Capex announcements by large tyre companies. The company's internally developed technology for processing zinc scrap, refined over two decades, provides a competitive edge. This IP allows J.G.Chemicals to handle diverse forms and purities of scrap, making it difficult for smaller or newer players to replicate the quality and consistency required by blue-chip customers.

While Q2 FY26 saw a temporary dip in EBITDA margin to 9.94% due to higher cost inventory, the H1 FY26 margin stood at 10.29%. Management expects margins to improve significantly in the coming quarters, targeting an increase to 13-14% within the next 2-3 years. This improvement is linked to stabilizing logistics, improving zinc prices, and the increasing contribution from higher-margin non-rubber applications. The company maintains that it is largely agnostic to zinc price fluctuations, with any increases generally benefiting its core inventory profile.