Jyoti Resins - Jyoti Resins

📊 BSE: 514448 🏢 Specialty Chemicals 📅 Last Updated: 11/13/2025 15:25

💰 Financial Performance

Revenue Growth by Segment

The company operates in a single product segment: synthetic wood adhesives (white glue). Reported revenue for Q2 FY26 was INR 74.4 Cr, representing an adjusted revenue growth of 20% YoY. This growth is driven by a 20% increase in sales volumes despite a heavy and prolonged monsoon season.

Geographic Revenue Split

Approximately 80-85% of revenue is generated from five core existing states, with Gujarat being a primary market. The company is aggressively expanding into Uttar Pradesh and Delhi, where it has on-boarded over 650 dealers, and is targeting growth in Karnataka and Maharashtra (Mumbai and Pune).

Profitability Margins

The company reported a PAT margin of 23.1% for Q2 FY26, with a Net Profit of INR 17.2 Cr. Gross margins are managed through an asset-light model and operational efficiencies, though specific gross margin percentages were not disclosed. The company aims to maintain return ratios (ROE and ROCE) between 25-30% (MDA) or up to 30-40% (Investor Presentation).

EBITDA Margin

EBITDA margin stood at 27.5% for Q2 FY26, with an Operating EBITDA of INR 20.5 Cr. Management guides for a full-year FY26 EBITDA margin of 27-28%, though long-term guidance is set at 25% to account for potential raw material price increases and intensified competition requiring higher brand investments.

Capital Expenditure

Planned brownfield capital expenditure is estimated at INR 5 Cr to INR 7 Cr over the next six months to increase capacity by 1,500 tons per month. The company is also scouting land for a future greenfield expansion on the outskirts of Ahmedabad.

Credit Rating & Borrowing

The company is entirely debt-free as of September 2025. It maintains a zero-debt status to provide a financial buffer against economic volatility and does not have sanctioned working capital limits exceeding INR 5 Cr.

⚙️ Operational Drivers

Raw Materials

The primary raw materials are chemicals used for water-based Polyvinyl Acetate (PVA) wood adhesives. While specific chemical names like VAM are not explicitly listed, PVA-based formulations constitute the core product cost. Raw material price volatility is cited as a key risk to profitability.

Capacity Expansion

Current installed capacity is 2,000 Tons Per Month (TPM) or 24,000 TPA. A brownfield expansion is underway to add 1,500 TPM, bringing total capacity to 3,500 TPM (42,000 TPA) within the next two quarters (by mid-2026).

Raw Material Costs

Raw material costs are a significant portion of the cost structure, though the exact percentage of revenue is not specified. Management uses operational efficiency and an asset-light model to navigate input cost volatility, which can fluctuate based on global chemical prices.

Manufacturing Efficiency

Current capacity utilization is between 60% and 70%. The company maintains an asset turnover ratio of 8x and achieves among the highest EBITDA per tonne compared to industry peers due to its lean operational structure.

Logistics & Distribution

Selling and distribution expenses are approximately 16-17% of revenue according to investor presentations, while MDA reports a figure under 12%, suggesting different accounting classifications for trade marketing and logistics.

📈 Strategic Growth

Expected Growth Rate

30%

Growth Strategy

The company plans to achieve its 30% revenue CAGR and INR 500 Cr turnover target through a '2.0 journey' involving: 1) Expanding capacity by 75% (from 2,000 to 3,500 TPM); 2) Increasing penetration in UP and Delhi; 3) Investing 7-8% of revenue into trade marketing and brand communication; 4) Strengthening SOPs and hiring senior management like a new COO; and 5) Enhancing digital infrastructure through CRM and carpenter-focused mobile apps.

Products & Services

High-grade synthetic wood adhesives, specifically water-based Polyvinyl Acetate (PVA) white glue, sold primarily to the retail segment for carpentry and home improvement.

Brand Portfolio

EURO 7000, EURO Adhesives.

New Products/Services

The company is focusing on its core white glue category but is exploring customized products for the OEM business, including modular furniture, PVC, and MDF segments.

Market Expansion

Targeting national leadership by expanding from its 14-state footprint into new territories, with a specific focus on scaling UP, Delhi, and Karnataka over the next 12-18 months.

Market Share & Ranking

Ranked as the 2nd largest selling wood adhesive brand in India's retail segment.

Strategic Alliances

No current acquisitions or JVs in the pipeline, though management is open to opportunities that meet their margin and synergy requirements.

🌍 External Factors

Industry Trends

The industry is growing at a 7.1% CAGR through 2032. There is a rapid shift toward sustainable, water-based PVA solutions due to environmental regulations. Jyoti Resins is positioned in this 'most compliant' segment, having outpaced the industry with a 38% revenue CAGR over the last decade.

Competitive Landscape

Competes against larger, more diversified national players. Jyoti Resins maintains a 'focused approach' on the retail wood adhesive niche to defend its market share.

Competitive Moat

The moat is built on: 1) A powerful loyalty program for 350,000 carpenters (the key decision-makers); 2) A lean, asset-light model with 8x asset turnover; and 3) Strong brand recall for 'Euro 7000' as the #2 retail player. These are sustainable due to the high switching costs associated with carpenter trust in product quality.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending, the booming home improvement market, and rising consumer disposable income, which drive demand for furniture and wood adhesives.

Consumer Behavior

Shift toward modular furniture and professional home improvement services is increasing the demand for high-quality, fast-setting adhesives.

Geopolitical Risks

Potential trade barriers or global supply chain issues affecting chemical imports could impact raw material availability and pricing.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Companies Act, 2013, and environmental standards for chemical manufacturing. The company's focus on water-based products is a proactive response to tightening environmental norms.

Environmental Compliance

The company focuses on water-based PVA adhesives to comply with stricter environmental and safety regulations regarding solvent-based products.

Legal Contingencies

The company has disclosed the impact of pending litigations as of March 31, 2025, in Note 29 of its financial statements. Specific case values were not provided in the summary, but auditors confirmed disclosure of all material foreseeable losses.

⚠️ Risk Analysis

Key Uncertainties

1) Raw material price volatility (high impact on margins); 2) Seasonal demand fluctuations due to monsoons (impacted Q2 revenue by ~7% relative to volume); 3) Success of geographic expansion into non-core states.

Geographic Concentration Risk

High concentration with 80-85% of revenue coming from 5 states, primarily in Western India.

Third Party Dependencies

Dependency on a network of 65 distributors and 13,000 retailers for market access.

Technology Obsolescence Risk

Low risk in the adhesive category, but the company is mitigating digital lag by investing in new CRM and mobile application platforms for trade partners.