J.G.Chemicals Limited — Q2 FY26 earnings call

Call held 17 Nov 2025

Management summary

J.G.Chemicals reported a 6% YoY revenue growth for H1 FY26, reaching ₹438 crores, with a healthy EBITDA margin of 10.29%. The company's Dahej expansion is on track for H1 FY27 commissioning, promising significant revenue potential. While Q2 saw a temporary dip in EBITDA margins due to shipping delays, management is optimistic about future margin expansion driven by a strategic shift towards higher-margin non-rubber applications and stabilizing logistics.

Highlights

  • Consolidated revenue from operations for H1 FY26 grew 6% year-on-year to ₹438 crores.

  • EBITDA margin for H1 FY26 was 10.29%, and PAT margin was 7.16%.

  • Dahej greenfield expansion is progressing as planned, with Phase-1 commissioning expected in H1 FY27, projected to generate over ₹900 crores in revenue for both phases.

  • The company recently paid a dividend of ₹1 per share for FY24-25 and expects to continue dividend payouts.

  • Strong focus on increasing non-rubber applications from 15% to over 30% in the next 4-5 years, which are higher-margin products.

  • Internally developed zinc scrap processing technology provides a competitive advantage and is difficult for newcomers to replicate due to scale requirements.

Concerns

  • Q2 FY26 EBITDA margin marginally declined by 0.7% to 9.94% primarily due to the consumption of higher cost inventory arising from shipping delays in the previous period.

Key financials

2 periods

Q2 FY26

  • Consolidated Revenue
    ₹220 Cr
    YoY +4%
  • EBITDA
    ₹21.9 Cr
  • EBITDA Margin
    9.9%
  • PAT
    ₹15 Cr

H1 FY26

  • Consolidated Revenue
    ₹438 Cr
    YoY +6%
  • EBITDA
    ₹45 Cr
  • EBITDA Margin
    10.3%
  • PAT
    ₹31 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.

Segment breakdown

  • Zinc Sulphate
    20% Revenue Growth (H1 FY26)
  • Zinc Oxide
    6% Volume Growth (H1 FY26)

Capital allocation

high confidence
  • Capex ₹100 Cr
    • Dahej greenfield expansion (40,000 metric tons zinc chemical facility) ₹100 Cr
    • Land for Dahej facility ₹25 Cr
    As we mentioned in our presentation, the Dahej project was approved by the Board in August 2025. And we have started construction for the same. And the total project outlay would be Rs. 100 crores. So, you see the amount spent already for the land, etc. is about Rs. 25 crores- Rs. 26 crores.
  • Dividend ₹1/share (interim)
    I am also happy to mention here that the company recently paid a dividend of Rs. 1 per share for the FY '24-25. We expect to continue the dividend payout in future years.

Guidance & targets

Capacity

  • Dahej Phase-1 Commissioning Capacity · H1 FY27 · High confidence H1 FY27
    This 40,000 metric tons per annum zinc chemical facility at Dahej is progressing as planned. Phase-1 of the facility is expected to be commissioned in H1 of FY '27.

    — Anirudh Jhunjhunwala

  • Dahej Phase-2 Commissioning Capacity · 2-2.5 years after Phase-1 · Medium confidence 2-2.5 years after Phase-1
    We expect the second phase to start probably in a couple of years post the commissioning of Phase-1, because as a prudent allocator of capital, we like to slowly deploy our capital as and when we see the utilization levels reaching a level, which is where it makes it necessary for us to press the pedal and expand further.

    — Anuj Jhunjhunwala

Revenue

  • Dahej Facility Revenue Potential Revenue · once stabilized (both phases) · High confidence >₹900 crores
    And once stabilized, the plant has the potential to generate revenues over 900 crores.

    — Anirudh Jhunjhunwala

  • Dahej Phase-1 Revenue Contribution Revenue · H2 FY27 · Medium confidence 40-50% of capacity
    I mean, it is difficult to say, but H2 will definitely see revenue coming in. Whether it will be 40%-50% or 30%, that time will stay.

    — Anirudh Jhunjhunwala

Profitability

  • EBITDA Margin Profitability · next 2-3 years · Medium confidence 13-14%

    From 10-11% today

    As I mentioned, the EBITDA margins are currently in the 10%-11% range, and we expect these to inch up to the 13%-14% range in the next 2 to 3 years when the share of non-rubber applications increases from where it is to where we intend to take it to about 30%.

    — Anuj Jhunjhunwala

Product Mix

  • Non-rubber Share of Revenue Product Mix · next 4-5 years · Medium confidence >30%

    From 15% today

    We are also expanding proactively into non-rubber applications and aim to increase the non-rubber share from the current 15% to over 30% in the next four to five years.

    — Anirudh Jhunjhunwala

Industry Growth

  • Tyre Industry Growth Industry Growth · next couple of years · High confidence 7-8%
    So, with the tyre industry, as we mentioned even in the last quarter, the tyre industry is expected to grow between 7% and 8% in the next couple of years.

    — Anirudh Jhunjhunwala

Product Development

  • Recycled Rubber Product Trials Product Development · Q4 · High confidence Q4
    This project is moving very well and trials are expected to begin soon in the coming Q4.

    — Anirudh Jhunjhunwala

Capacity Utilization

  • Existing Plant Capacity Utilization Capacity Utilization · until Dahej operational · High confidence 85%

    From 70% today

    Our current capacity utilization in our existing plant is around 70% of the achievable capacity. And we can easily take that up to about 85% without much constraints.

    — Anirudh Jhunjhunwala

Market Share

  • Ceramics Market Share (India) Market Share · in a couple of years · Medium confidence 15-20%

    From <1% today

    Our share of business in the ceramic market is very, very low, less than 1% today because of lack of presence in the region... We expect that once we enter the ceramic market in a couple of years' time, we should be looking at atleast 15% to 20% market share in that segment.

    — Anuj Jhunjhunwala

What to watch in Q3 FY26

Dahej Phase-1 commissioning progress

next quarter
Current Progressing as planned
Target On track for H1 FY27 commissioning

Why it matters

Timely commissioning of Dahej Phase-1 is crucial for new capacity and revenue growth targets.

Phase-1 of the facility is expected to be commissioned in H1 of FY '27.

Risks & concerns

  • Zinc price volatility impact on margins

    medium

    While the company is generally agnostic to zinc prices, sharp swings can have a short-term impact on core inventory margins, though management implies it's manageable.

    Analyst downplayed

  • EBITDA margin compression due to inventory costs

    low

    Q2 FY26 EBITDA margin declined marginally by 0.7% due to consumption of higher cost inventory from shipping delays, but management states it's a temporary factor.

    Management acknowledged

Q&A highlights

6 direct
Inorganic expansion opportunities Partial
As we mentioned before, the company continues to evaluate different opportunities which come its way. We are working on the opportunities which are there today. And as and when the timing is right, we will announce it to the markets as per the regulatory requirements.

Analysts are probing for strategic growth avenues beyond organic expansion, and management confirms active evaluation without disclosing specifics.

Asked by Ashmita

EBITDA margin guidance and trajectory Direct
As I mentioned, the EBITDA margins are currently in the 10%-11% range, and we expect these to inch up to the 13%-14% range in the next 2 to 3 years when the share of non-rubber applications increases from where it is to where we intend to take it to about 30%.

Clarifies the expected margin improvement linked to product mix shift, providing a clear numerical target and timeline.

Asked by Ashmita

Outlook for the tyre industry Direct
So, we expect a healthy growth in tyre business. A lot of our large tyre companies have announced Capex also. They are increasing capacity. I think overall in India, if the economy does well, tyre is one of the biggest beneficiaries because everything in the economy that moves, moves through the tyre. So, we are expecting a robust growth in the tyre business in the next couple of years.

Provides management's positive outlook on a key end-user industry, citing macro factors and industry-specific Capex.

Asked by Aman Singh

Proprietary zinc scrap processing technology Direct
As far as the technology for processing scrap is concerned, this is 100% an internally developed technology. It is an IP that is internally owned. And this has been done over the last two decades of trials, errors, learning, and continuous R&D.

Highlights a key competitive advantage and barrier to entry for new players, emphasizing the company's long-term investment in R&D and process know-how.

Asked by Aman Singh

Impact of rising zinc prices on company business Partial
So, you know, as we have always mentioned in the past that the company carries a core inventory of zinc in its portfolio. And any increase in the prices of zinc obviously helps in the overall margin profile going ahead.

Addresses concerns about raw material price volatility, indicating that the company's inventory management and business model can benefit from rising prices.

Asked by Aman Singh

Dahej expansion Phase-2 details and revenue contribution Direct
The Phase-1 would be starting in H1 FY '27. We expect the second phase to start probably in a couple of years post the commissioning of Phase-1... And the total revenue potential from this investment would be in the range of about Rs. 900 crores for both the phases put together.

Provides clarity on the phased approach and long-term revenue potential of the significant Dahej expansion project.

Asked by Nitin Gandhi

New recycled rubber product and market adoption Direct
This is a new age product. This is a product which the tyre industry is looking for. Every day there is a pressure on the tyre industry to increase their recyclable content. Wherever there is an opportunity to do that, the tyre industry is more than willing to try it, do that, and expand on that.

Reveals a new product initiative aligned with ESG trends and customer demand for higher recyclable content, indicating future growth drivers.

Asked by Deep Gandhi

Ceramics market share targets post-Dahej Direct
Our share of business in the ceramic market is very, very low, less than 1% today... We expect that once we enter the ceramic market in a couple of years' time, we should be looking at atleast 15% to 20% market share in that segment.

Outlines aggressive market share targets in a new, high-growth segment (ceramics) enabled by the Dahej plant, indicating diversification strategy.

Asked by Mohit

2 min read 5 chapters

Detailed narrative

Q2 & H1 FY26 Financial Performance Overview

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.

Dahej Greenfield Expansion Progress

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.

Strategic Focus: Non-Rubber Applications & Recycling

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.

Tyre Industry Outlook and Zinc Scrap Management

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.

EBITDA Margin Trajectory and Raw Material Dynamics

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.

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