JGCHEM - J.G.Chemicals

📊 NSE: JGCHEM 🏢 Chemicals 📅 Last Updated: 12/14/2025 8:31

💰 Financial Performance

Revenue Growth by Segment

The company derives approximately 95-98% of its revenue from Zinc Oxide variations. Total income grew 27% year-on-year from INR 675.4 crore in FY24 to INR 858 crore in FY25. For H1 FY26, consolidated revenue from operations reached INR 438.3 crore, representing a 5.7% growth compared to H1 FY25. Zinc Sulphate is being introduced to diversify the portfolio, though it currently represents a small fraction of total sales.

Geographic Revenue Split

The company operates three units in West Bengal (Belur and Howrah) with a 16,200 MT capacity and a unit in Andhra Pradesh (Nellore) with 43,704 MT capacity for Zinc Oxide and 10,080 MT for Zinc Sulphate. A new greenfield facility is being established in Gujarat to target the western market, with a revenue potential of INR 900 crore.

Profitability Margins

Net Profit Margin improved significantly from 6.73% in FY24 to 10.6% in FY25, a 387 bps increase. However, H1 FY26 PAT margin stood at 7.16%, a decline of 80 bps YoY. Return on Net Worth (RoNW) increased from 8.16% in FY24 to 14.52% in FY25, reflecting better capital efficiency.

EBITDA Margin

EBITDA margin was 11.34% in FY25, up 339 bps from 7.95% in FY24. For H1 FY26, the EBITDA margin was 10.29%, a 117 bps decline from 11.46% in H1 FY25. Q2 FY26 saw a marginal 0.7% decline in EBITDA margin to 9.94% due to the consumption of high-cost inventory caused by shipping delays.

Capital Expenditure

The company is undertaking a greenfield capex of approximately INR 100 crore in Gujarat over the next four fiscals (phased manner). This project is being funded entirely through internal accruals, maintaining a debt-free status.

Credit Rating & Borrowing

The company maintains a 'Strong' liquidity profile with a CRISIL rating outlook of 'Stable'. Borrowing costs are minimal as the company is virtually debt-free with a Debt-Equity ratio of 0.00 as of March 31, 2025. Bank limit utilization averaged only 4% to 9% during 2024-2025.

⚙️ Operational Drivers

Raw Materials

Zinc (virgin zinc and zinc scrap for recycling) is the primary raw material, accounting for the bulk of the cost of goods sold. The company is the largest recycler of zinc in India.

Import Sources

Not explicitly disclosed by country, but the company manages a global supply chain and recently faced shipping delays that impacted inventory costs.

Capacity Expansion

Current combined capacity for Zinc Oxide is 59,904 MTPA (16,200 MT in West Bengal and 43,704 MT in Andhra Pradesh). A new 40,000 MTPA greenfield facility is being set up in Gujarat to manufacture zinc chemicals including zinc oxides and zinc sulphates.

Raw Material Costs

Raw material costs are highly sensitive to LME zinc prices. While a pass-through mechanism exists, sharp price declines (like the 280 bps margin drop in Q1 FY24) or shipping-related inventory cost spikes (Q2 FY26) directly impact profitability.

Manufacturing Efficiency

The company maintains a lean inventory holding period and has improved its working capital cycle. Interest coverage ratio improved drastically from 13.36 in FY24 to 107.13 in FY25 due to debt reduction.

Logistics & Distribution

The company is expanding geographically to Gujarat to optimize distribution to the tyre and chemical hubs in Western India.

📈 Strategic Growth

Expected Growth Rate

20%

Growth Strategy

Growth will be driven by the commissioning of the Gujarat greenfield facility (INR 900 Cr revenue potential), diversification into high-margin Zinc Sulphate for the fertilizer industry, and increasing wallet share with existing tyre and rubber customers. The company aims for a revenue growth rate of more than 20% to trigger credit rating upgrades.

Products & Services

Zinc Oxide (used in tyres, ceramics, paints, pharma) and Zinc Sulphate (used in fertilizers).

Brand Portfolio

JG Chemicals, BDJ Oxides (subsidiary).

New Products/Services

Zinc Sulphate and other value-added zinc chemicals are being introduced to reduce product concentration risk.

Market Expansion

Expansion into the South Indian fertilizer market via the Nellore plant and the Western Indian industrial hub via the upcoming Gujarat plant.

Market Share & Ranking

JG Chemicals is India's largest zinc oxide manufacturer with approximately 30% market share.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward value-added zinc chemicals and increased recycling. The tyre industry remains the primary driver, currently benefiting from a revival in automobile demand.

Competitive Landscape

JG Chemicals is the market leader in a fragmented industry, competing with smaller regional players and virgin zinc oxide producers.

Competitive Moat

The company's moat is built on its 30% market share, status as the largest zinc recycler in India, and 30+ years of promoter experience, which fosters deep relationships with major tyre manufacturers.