J.G.Chemicals Limited — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

J.G.Chemicals delivered its strongest quarterly performance in Q3 FY26, driven by robust demand, higher realizations, and improved capacity utilization. The company is actively expanding capacity with greenfield and brownfield projects, alongside investing in renewable energy. While gross margins saw a slight decline due to raw material lag, management emphasized strong EBITDA performance and a positive outlook for future growth, particularly in specialized products and non-rubber segments.

Highlights

  • Q3 FY26 consolidated revenue from operations reached ₹249 crores, registering almost 19% YoY growth.

  • Achieved highest-ever quarterly sales, EBITDA (₹26 crores), and PAT (₹18 crores) in Q3 FY26.

  • Dahej greenfield project (Phase 1 capex ₹45-50 crores) is on track for Q2 FY27 commissioning, with a revenue potential of ₹400 crores.

  • Pilot-scale trials for the recycled rubber project have commenced with encouraging initial results.

  • Commissioned Phase 1 of a new solar power generation project (₹2.5 crores capex) with an expected IRR of 18-20% and annual incremental profitability of ₹60-70 lakhs for four years.

Concerns

  • Gross margins declined YoY due to a lag effect in raw material consumption, though management prefers EBITDA as a more holistic view.

  • Zinc sulphate segment growth was only 3-4% YoY, attributed to farmer price sensitivity to high zinc and sulphuric acid prices.

  • No specific inorganic acquisition announcements were made, despite prior mentions of exploring opportunities.

Key financials

2 periods

Q3 FY26

  • Revenue
    ₹249 Cr
    YoY +19%
  • EBITDA
    ₹26 Cr
  • PAT
    ₹18 Cr

9M FY26

  • Revenue
    ₹687 Cr
  • EBITDA
    ₹71 Cr
  • PAT
    ₹50 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

  • Q3 FY26 Revenue Mix
    83% Rubber Segment Share17% Non-Rubber Segment Share
  • Zinc Oxide
    — Volume Growth (Current Period)
  • Zinc Sulphate
    3% YOY Growth

Capital allocation

high confidence
  • Capex Capex disclosed internal accruals and current/future cash flows
    • Dahej greenfield project (Phase 1) ₹45 Cr
    • Naidupeta brownfield expansion ₹5 Cr
    • Solar power generation (Phase 1) ₹2.5 Cr
    So currently if you see our balance sheet, we have over INR150 crores of cash available, cash and cash equivalents in the company. Further, if you see the cash flow generated from operations in this particular 9-month period is fairly healthy. So obviously ours is a business which requires about 100 days of working capital... So there's absolutely no question of taking on any debt because the company anyway has surplus cash and the current cash flows and the future cash flows that we plan to generate should more than sufficiently take care of the working capital financing that is required.
  • Debt Debt disclosed
    So there's absolutely no question of taking on any debt because the company anyway has surplus cash and the current cash flows and the future cash flows that we plan to generate should more than sufficiently take care of the working capital financing that is required.
  • Liquidity Cash ₹150 Cr Company has over INR 150 crores of cash available and healthy cash flow from operations, sufficient to finance incremental working capital and capex without debt.
    So currently if you see our balance sheet, we have over INR150 crores of cash available, cash and cash equivalents in the company... So there's absolutely no question of taking on any debt because the company anyway has surplus cash and the current cash flows and the future cash flows that we plan to generate should more than sufficiently take care of the working capital financing that is required.

Guidance & targets

Revenue

  • Revenue Doubling Revenue · Every 3-4 years max · High confidence Double revenues
    So you know we mentioned that our internal targets are that every three to four years max we want to double our revenues.

    — Anuj Jhunjhunwala

  • FY26 Revenue Revenue · FY26 · High confidence Over ₹900-950 crores
    So last year we closed with about INR857 crores of top line. And I think this year our based 9 month revenue is close to INR700 crores. So I think we should be closer you know I mean if the same run rate continues we will be definitely over INR900 crores, INR950 crores of revenue in this particular financial year.

    — Anuj Jhunjhunwala

  • Export Share of Revenue Revenue · Near future · High confidence 10-15%
    So export share is about 13% to 14%. I would say give or take 1% on a three-month and a nine-month basis. And as we've guided earlier, exports will be in the range of 10% to 15%. Yes, the base gets higher, so the volume number in exports increases, but we don't expect this export share to become 25%-30% in the near future.

    — Anuj Jhunjhunwala

Margin

  • Core EBITDA Margin Margin · Ongoing · High confidence 10.5-11%
    So as we've mentioned earlier the core EBITDA margin of the company is around 10 to -- between 10.5% to 11%. That's the basic EBITDA margin that we aspire to make.

    — Anuj Jhunjhunwala

  • EBITDA Margin with specialized products Margin · Next 2-3 years · High confidence 13-14% minimum
    And as we you know increase the contribution of specialized products with operating leverage etcetera, this would increase to about 13% to 14% minimum in the next 2 to 3 years' time.

    — Anuj Jhunjhunwala

Product Mix

  • Non-Rubber Revenue Share Product Mix · Next 2-3 years · High confidence 30%
    So just to clarify just to answer to his point, the revenue mix between rubber and non-rubber would change to about 70-30 I think in the next 2 to 3 years' time. That's what our internal target is.

    — Anuj Jhunjhunwala

Capacity

  • Achievable Capacity Utilization Capacity · Ongoing · High confidence 80-85% (max 90%)
    So currently utilization would be in the late 70s of the achievable capacity and we've always mentioned that our target is to be in the 80% to 85% range, 85% to 90% max is what we like to do.

    — Anuj Jhunjhunwala

  • Dahej Plant Phase 1 Commissioning Capacity · Q2 FY27 · High confidence Commissioned
    I would say the commencement should be in Q2; that's our internal target.

    — Anuj Jhunjhunwala

  • Dahej Plant Full Utilization (Phase 1) Capacity · About 2-2.5 years from commencement · Medium confidence Full utilization
    And in terms of full utilization, I would say about 2 to 2.5 years should be the base case scenario for a reasonable utilization and then we'll start the expansion for Phase 2.

    — Anuj Jhunjhunwala

Sustainability

  • Renewable Power Share Sustainability · Four years' time · High confidence 55-60%
    So, our renewable power the share of renewable power, our target is to go up to about 55% to 60% in four years' time and with phased investments over the next three to four years' time we feel this can be done.

    — Anuj Jhunjhunwala

Capital Allocation

  • Solar Power Project IRR Capital Allocation · High confidence 18-20%
    And in terms of the saving, I would say based on our understanding and our workings, the IRR of a solar power plant basis the current power cost etcetera, that we have is close to about 18% to 20%.

    — Anuj Jhunjhunwala

Profitability

  • Incremental Profitability from Solar Project Profitability · Next four years, each year · High confidence ₹60-70 lakhs per year
    So I think, the incremental profitability per year should be about INR60 to INR70 lakhs per year over the next four years, each year.

    — Anuj Jhunjhunwala

What to watch in Q4 FY26

Zinc Inventory Gains Realization

Q4 FY26
Current Not much accrued in Q3 FY26
Target Flow in bit by bit in Q4 FY26

Why it matters

Will impact Q4 margins and overall profitability due to rising zinc prices in Q3.

As I mentioned that the zinc prices rose in Q3, so the inventory gains for that weren't really much accrued in Q3. They would rather flow in bit by bit in Q4, I would imagine.

Risks & concerns

  • Raw Material Price Volatility (Zinc)

    medium

    While the company's LME M-1 pricing model makes it largely agnostic to zinc price fluctuations, inventory gains/losses can occur, impacting quarterly margins.

    Analyst acknowledged

  • Demand Cyclicality in Zinc Sulphate

    medium

    High prices of zinc and sulphuric acid have made farmers price-sensitive, leading to a 'slowness in demand' for zinc sulphate, though management expects this to be a deferred demand.

    Management acknowledged

  • Lag Effect on Gross Margins

    low

    A 3-4 month lag between raw material contracting and consumption can cause gross margin fluctuations, but management emphasizes EBITDA as a more holistic performance indicator.

    Analyst acknowledged

Q&A highlights

7 direct
Pricing Scenario & Margin Expansion Direct
So as a company, we believe in responsible pricing and whether the demand is muted or is in a buoyant stage, the company has very long-standing relationship with our customers wherein any cost pressure on the company is passed on and is absorbed by our customers, and in indirect they obviously try to pass it on to their OEMs.

Clarifies the company's pricing power and pass-through mechanism, indicating stable margins despite input cost volatility in a premium segment.

Asked by Mohit Chugh

Zinc Price Volatility & Inventory Gains Direct
So in the last quarter, we have seen in the last few months zinc prices going up, so obviously those gains should accrue in the current quarter on the inventory which the company carries... They would rather flow in bit by bit in Q4, I would imagine.

Explains the M-1 pricing model and how inventory gains from rising zinc prices in Q3 will positively impact Q4 margins, providing insight into short-term margin drivers.

Asked by Mohit Chugh

Recycled Rubber Project Procurement Direct
So as far as this business is concerned, the procurement of used tires would be both domestic and international. For international, it's a controlled mechanism wherein you need to take a license... Domestically, this comes through traders and dealers who are basically scrap collectors, scrap tire collectors.

Provides crucial operational details on raw material sourcing for a new strategic project, highlighting both domestic and international channels.

Asked by Mohit Chugh

Gross Margin vs. EBITDA Margin Assessment Direct
So if you see, as we mentioned that in our business there is a lag effect of materials flowing in, there's imports which happen, sometimes there could be a couple of months' lag between the date at which we've contracted with a supplier and the time at which the material is actually consumed... So I think the right way to look at our business is not just on the gross margin, but on the EBITDA margin segment.

Guides investors on the appropriate profitability metric (EBITDA) to evaluate the company, given the lag effects of raw material procurement on gross margins.

Asked by Ashmita

Dahej Plant Capacity & Revenue Potential Direct
So the Dahej project would have a capex of total INR100 crores and it has a revenue potential of about INR900 crores plus over a couple of phases. So in first phase, we'll obviously not be putting up the entire capex; it will be about INR45 crores-INR50 crores and the revenue potential should be in the range of about INR400-odd crores for that.

Provides specific financial targets and phased investment details for a major capacity expansion, crucial for future revenue growth projections.

Asked by Kaushal Sharma

Zinc Scrap Duty Removal Impact Direct
So there has been no removal of duty on zinc oxide; there was a removal of duty on zinc scrap, zinc scrap which was the last year budget. But that does not really impact us because the item that we manufacture is zinc from which we manufacture is zinc dross. We are working with the government, there should have been removal of duty also on zinc dross because zinc dross is also a form of zinc scrap.

Clarifies a potential regulatory change and its actual impact on the company, highlighting ongoing advocacy efforts for beneficial policy changes related to raw material costs.

Asked by Deep Gandhi

Zinc Sulphate Growth & Demand Dynamics Direct
Current year the business has not grown as we would have expected on the volumes is because with the zinc prices going high the farmer community is always a little more sensitive to the zinc prices. And because of sulphuric acid and zinc both going up there is obviously a little slowness in demand.

Explains the demand dynamics and price sensitivity in the zinc sulphate market, providing context for its slower growth and potential for pent-up demand.

Asked by Dhiral Shah

3 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Highlights

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.

Strategic Capacity Expansion and New Projects

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 and Renewable Energy Initiatives

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.

Product Mix and Margin Improvement Targets

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.

Industry Outlook and Demand Drivers

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.

Raw Material Pricing and Inventory Management

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.

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