JGCHEM - J.G.Chemicals Limited Share Price

Management at JG Chemicals Limited expressed an optimistic outlook for the company in their earnings call held on May 15, 2026. They reported a record performance for the fiscal year ending March 2026, with revenues of INR 972.9 crores, an EBITDA of INR 97.9 crores, and PAT of INR 68.6 crores. For Q4 alone, revenue reached INR 286.2 crores, a 27.6% year-on-year increase.

Key forward-looking points highlighted by management include:

1. Capacity Expansion: The Dahej facility is on track, expected to boost JG's total zinc oxide capacity to over 115,000 metric tons per annum by 2029, significantly enhancing their market presence.

2. Product Development: The company aims to develop new varieties of zinc oxide and implements a recycled rubber project, which holds potential for substantial market growth in collaborations with tire manufacturers.

3. Sustainability Initiatives: The Phase 1 solar power project at Naidupeta has been commissioned, part of their broader sustainability agenda aimed at reducing carbon emissions and enhancing energy efficiency.

4. Industry Demand: Management highlighted strong demand trends, particularly from the tire industry, with expectations for robust growth supported by government measures like increased infrastructure spending (INR 12.2 lakh crores allocated) and favorable GST reforms.

5. Utilization Rates: Current utilization for zinc oxide is approximately 77% with potential to rise to 86-87%, indicating capacity for growth amid demand.

6. Geopolitical Resilience: The management expressed confidence in navigating supply chain challenges due to their established supplier relationships, ensuring uninterrupted operations.

Overall, JG Chemicals is well-positioned to capitalize on market opportunities while focusing on sustainability and innovative product offerings.

Q1: Can you give a brief about what is the capacity utilization for both the zinc sulphate and the zinc oxide?
A1: Currently, for zinc oxide, our capacity utilization is about 77%. We can easily increase this up to 86% to 87%, which means we have about 10% spare capacity. On the other hand, our zinc sulphate business is presently operating at approximately 60% of its installed capacity.

Q2: What is the personal contribution of exports to sales?
A2: Exports contribute roughly between 10% and 15% to our total sales. This percentage reflects our efforts to expand global outreach, while still focusing heavily on domestic markets.

Q3: What is your execution status of the debottlenecking plant in Naidupeta?
A3: We are actively working on debottlenecking, taking gradual steps to free up capacity additions. We expect to fully complete this process by December 2026.

Q4: How tough is it to get certifications like IATF and WHO for competitors?
A4: Acquiring certifications like IATF and WHO is a multi-year process that goes beyond just paying a fee. It's about maintaining consistent quality and adapting to industry needs, which can be challenging for competitors. Therefore, while anyone can theoretically achieve these certifications, practically it requires significant investment and commitment, something few competitors are currently pursuing.

Q5: What kind of utilization are you expecting for the Gujarat plant in H2 FY27?
A5: For the Gujarat plant, we anticipate reaching a utilization of about 35% to 40% in H2 FY27. For FY28, we expect that to increase to approximately 65% to 70% utilization as we ramp up production.

Q6: Will the zinc chemicals produced at Dahej yield higher margins?
A6: Currently, our EBITDA margins range from 10% to 11%. As we introduce higher value-added products from the Gujarat facility, we aim to increase blended margins to around 13% to 14%, making it a meaningful contributor to our overall financial performance.

Q7: Can you share the volume growth for the quarter and the full year?
A7: We're confident in achieving double-digit volume growth for this fiscal year. For the current quarter, we've seen volumes in the mid-teens, reflecting strong demand across our customer segments.

Q8: What impact will rising commodity prices have on your margins?
A8: Our pricing strategy allows us to transparently pass on increased costs, including energy and raw materials, to our customers. Consequently, we expect our EBITDA margins to stabilize around 10% to 11% moving forward despite any commodity price volatility.

Q9: What is the expected contribution of the Gujarat plant to revenue by FY29?
A9: We expect the new Gujarat plant to generate around INR 900 crores in sales at full capacity, and we are targeting to reach this milestone by approximately FY29.

Q10: What percentage of a tire's production costs does zinc oxide represent?
A10: Quantitatively, zinc oxide comprises about 3.5% to 5% of the tire compound. In terms of cost, it contributes roughly 1% to 1.5% of the total cost of production for tires.