J.G.Chemicals Limited

J.G.Chemicals achieved its highest-ever quarterly sales, EBITDA, and PAT in Q3 FY26. Consolidated revenue from operations stood at INR 249 crores, marking an almost 19% year-on-year growth. EBITDA reached INR 26 crores, and PAT was approximately INR 18 crores. For the nine months ended December 31, 2025, revenue was INR 687 crores, EBITDA was INR 71 crores, and PAT was INR 50 crores. This strong performance was driven by higher realization, improved capacity utilization, and an increased mix of specialized orders.

The company is actively pursuing significant capacity expansions to meet future demand. The greenfield project at Dahej, Gujarat, with a total capex of INR 100 crores, is progressing as planned, with Phase 1 costing INR 45-50 crores and expected to commission in Q2 FY27, adding approximately INR 400 crores in revenue potential. A brownfield expansion at the Naidupeta facility, costing under INR 5 crores, will add 4,000-5,000 tons of capacity. Additionally, pilot-scale trials for a new recycled rubber project have commenced, showing encouraging initial results for this specialized product.

Sustainability is a core focus, with efforts to maximize recycled zinc use to reduce costs and environmental impact. As part of its sustainability drive, J.G.Chemicals commissioned Phase 1 of a new solar power generation project at Naidupeta with an investment of approximately INR 2.5 crores, expected to commence in February 2026. The company targets to increase its renewable power share to 55-60% within four years, with an estimated IRR of 18-20% for the solar project, yielding INR 60-70 lakhs in incremental profitability annually for the next four years.

The current revenue mix is approximately 83-85% from rubber and 15-17% from non-rubber segments. The company aims to shift this mix to 70% rubber and 30% non-rubber within the next 2-3 years. The core EBITDA margin is currently around 10.5-11%, with a target to increase it to a minimum of 13-14% in the next 2-3 years by increasing the contribution of specialized products and leveraging operating efficiencies. This strategy is expected to drive margin expansion and portfolio diversification.

The company observes healthy demand momentum in the tire industry, benefiting from GST-led reforms and good monsoons supporting two-wheeler and agriculture tire demand. The automotive industry shows strong momentum, driven by infrastructure development and favorable financing conditions. Leading tire manufacturers are announcing significant capex plans of over INR 12,000 crores over the next 2-3 years, indicating strong long-term volume growth for J.G.Chemicals. Export opportunities are also expected to grow with recent trade agreements.

J.G.Chemicals operates on an LME M-1 pricing model for zinc oxide, making it largely agnostic to zinc price fluctuations as costs are passed through to customers. However, the company expects inventory gains to accrue in Q4 FY26 due to rising zinc prices in Q3. For zinc sulphate, demand has seen some slowness, with only 3-4% YoY growth, attributed to increased prices of zinc and sulphuric acid making farmers more price-sensitive; this is viewed as a temporary deferral of demand.