Metrics raised 1
- FY29 EBITDA margin target raised to 14-15% (from 13-14% earlier)
Metrics cut 2
- Dahej Phase 1 commissioning delayed to Q3 FY27 (November 2026) from earlier H1 FY27
- Dahej FY28 utilization guidance cut to 50-60% minimum (from 65-70% earlier)
Event Participants
Executives
3 Amit Agarwal (GM Accounts & Finance), Aniruddh Jhunjhunwala (MD & CEO) [listed as Anirudh in transcript], Anuj Jhunjhunwala (WTD & CFO), Navin Agrawal (Head, Institutional Equities, SKP Securities - moderator)
Analysts
10 Ashish Tony (Family Office), C.A. Garvit Goyal (Serene Alpha), Deep Gandhi (ithought PMS), Deepesh J. Sancheti (Maanya Finance), Disha Chordia (Sapphire Capital), Harsh Motika (SKP Securities), Jayam Birawat (Yes Securities), Lakshmikant (Individual Investor), Shriyaz Chen (3A Capital Services), Vimal Panchal (Bimal Panchal and Associates), Vinit Thakur (Plus91 Asset Management)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹315.7 crores | +44.8% YoY and +10.3% QoQ over Q4 FY26; best-ever quarterly revenue driven by strong demand across end-user applications |
| EBITDA | ₹36.3 crores (11.5% margin) | Margin up 86 bps YoY from 10.64%; driven by operating leverage, higher specialized/value-added product share, cost optimization initiatives, and small inventory gains |
| PAT | ₹26.1 crores (8.27% margin) | Margin up 75 bps YoY from 7.52%; record quarterly PAT |
| Capacity Utilization | ~80% of achievable capacity | Existing facilities at Naidupeta (AP) and West Bengal running at early-80s utilization; room to ramp toward 100% of achievable capacity through debottlenecking |
| Volume Growth | Double digits (mid-teens) | Across all product categories, not just zinc oxide |
| Installed Capacity | ~70,000 MTPA | West Bengal + Andhra Pradesh facilities; expected to exceed 1,15,000 MTPA once both phases of Dahej commissioned |
| Exports Share | 10–15% of sales | Targeting ~15% going forward, focused on global market expansion |
| Non-Rubber Segment Share | ~18% of revenue (Q1 FY27) | Inching up every quarter; expected to accelerate meaningfully after Dahej commissioning given Gujarat's non-rubber concentration |
Geographic & Segment Commentary
Tire & Rubber (largest pillar): Demand momentum remained robust through Q1 FY27, continuing the strong run from FY26 exit. Per ATMA data, Q1 FY27 volume growth across vehicle categories was strong: passenger vehicles +26.6%, two-wheelers +16.5%, commercial vehicles +16.4%, three-wheelers +11% YoY. Indian tire majors have announced ~₹25,000 crores of capex; ~25% of tires produced in India are exported. Customers continue to operate at high capacity utilization, and the company supplies to every major Indian tire manufacturer and nine of the top 10 global tire companies.
Non-Rubber (ceramics, pharma, specialty chemicals, agri): Share is ~18% of Q1 revenue, with encouraging traction in pharma, ceramics, specialty chemicals and agri segments. Management has been "seeding" the ceramic market for the past year-plus with customer relationships established; Dahej's strategic location in Gujarat (near two of India's largest tire companies within 10–15 km, plus a large non-rubber consumption belt) is expected to be the catalyst for faster growth. Ceramic approval cycles are short (1–3 months) vs ~5 years for tires, enabling quicker ramp-up.
Zinc Sulfate Business: Currently less than 5–6% of overall sales; growing in South India where there are no large organized players. The business operates with inherent raw material circularity—zinc oxide byproducts are consumed internally for zinc sulfate production, providing a structural cost advantage. Western India expansion planned post-Dahej to leverage internal byproduct availability.
Exports: Currently 10–15% of sales; the new Dubai step-down subsidiary (BDJ Materials and Metal Trading FZCO) will focus on raw material sourcing and global sale/distribution of finished goods, supporting export growth and supply chain security.
Company-Specific & Strategic Commentary
Dahej Greenfield Facility (Gujarat): 40,000+ MTPA zinc chemical facility with ~₹100 crores investment and ~₹900 crores estimated revenue potential. Phase 1 (15,000–17,000 tonnes, purely zinc oxide) targeting commissioning in November 2026 (Q3 FY27); civil work advanced, equipment installation underway. Strategically positioned to deepen penetration into high-growth non-rubber segments (ceramics, specialty chemicals, pharma, agriculture) concentrated in Western India's Gujarat belt. Management expects phase 1 revenue potential of ₹300–400 crores at 11–12% EBITDA margins.
Naidupeta Brownfield Expansion & Solar: ~5,000 tonnes additional capacity through debottlenecking, expected commissioning in Q3 FY27 alongside Dahej. Phase 1 solar power project operational; further ESG initiatives under evaluation. Naidupeta remains the only IATF-certified zinc oxide facility globally, holding COOL GMP and multiple Pharmacopeia certifications.
R&D & Product Innovation: Added new grades in Q1—Lab Pure Zinc Oxide (high-purity for analytical reagent applications) and JDZRA (zinc oxide rubber activator for non-tire customers with strong export potential). Patent in advanced stage for a jointly-developed chemical with a premier Indian research institute offering improved processability and cure characteristics. New R&D center inaugurated at Naidupeta supporting product development, polymer testing, and quality enhancement. Over 90 specialized grades of zinc oxide now developed.
Recycled Rubber Project (JGTUR - Tire Upscaled Rubber): Pilot trials received positive customer response; commercial plan (capex, capacity, timeline, revenue) to be shared at an appropriate time. Product from 100% recycled rubber addresses tire industry's ESG and circularity commitments; expected commercial start within next 12 months. Complements the company's 100% recycled zinc oxide positioning.
Dubai Subsidiary: Proposed incorporation of BDJ Materials and Metal Trading FZCO (UAE) as a step-down wholly owned subsidiary of JG Chemicals (through BDJ Oxides Pvt Ltd). Will focus on raw material sourcing for the principal and sale/distribution of finished goods globally, strengthening supply chain security and global reach.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Dahej Phase 1 Commissioning | Q3 FY27 (November 2026 estimate) | Civil work advanced, equipment installation underway; ~15,000–17,000 tonnes zinc oxide capacity with ₹300–400 crores revenue potential |
| Dahej Utilization - FY28 | 50–60% (minimum) | Conservative revision from earlier 65–70% guidance due to commissioning moving from H1 to Q3 FY27; ramp-up expected after 3–4 months of stabilization |
| Dahej Utilization - FY29 | 70–80% | Target before phase 2 expansion; company typically expands when utilization hits late 70s–early 80s |
| Consolidated EBITDA Margin | FY27: ~11–12% (current range); FY29: 14–15% target | Current quarter margins ~11.5%; margin expansion driven by higher value-added products, operating leverage, new product launches, and Dahej's higher-margin profile once stabilized |
| Upcoming Quarterly Sales | Q2 FY27 expected higher than Q1 FY27 | Demand momentum continuing; current quarter experiencing similar margin profile to Q1 |
| Capex Payback | 3–4 years on new projects | Consistent with historical performance; expected ROIC in mid-20s |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical Supply Chain Disruption | Ongoing conflict has severely impacted global supply chains for zinc ash (primary raw material) over the last quarter. Management notes scale, financial strength, and long-standing supplier relationships have ensured uninterrupted supply; no customer impact reported. The Dubai subsidiary is being established partly to strengthen raw material sourcing resilience. |
| Raw Material Price Volatility | Zinc prices increased ~6–7% QoQ in Q1 and further 6–7% from June to August 2026. Management claims zinc price neutrality ("whether Zinc is at 3000 or 3500 or 3600, it really doesn't matter"), but sustained price escalation could impact working capital requirements and potentially compress margins if pass-through lags. |
| Project Execution Risk | Dahej commissioning has already slipped from H1 to Q3 FY27 (November 2026); delay in stabilization would push FY28 utilization targets down. Management acknowledged conservatism in revised FY28 utilization guidance (50–60% vs earlier 65–70%). |
| Utilization Ceiling on Existing Plants | Companies operating at ~80% of achievable capacity are constrained until Dahej comes online in Q3; debottlenecking and improved productivity are being used to bridge the gap but capacity headroom is limited in the interim. |
Q&A Highlights
Volume Growth & Utilization
- Question: What was utilization and volume growth across product categories? (Harsh Motika, SKP Securities)
- Answer: Utilization at early 80s of achievable capacity; volume growth in double digits, generally across all categories, not just zinc oxide (Aniruddh Jhunjhunwala, MD & CEO)
Margin Structure & Sustainability
- Question: How much of EBITDA margin improvement is attributable to inventory gains and how much is reversible? (Harsh Motika, SKP Securities)
- Answer: EBITDA margins structurally in the 10–12% range going forward; improvement driven by higher specialized/value-added applications, operating leverage, higher-priced orders, and a small amount of inventory gains. Newer products and customized applications should push margins higher. (Anuj Jhunjhunwala, CFO)
- Question: Will margins sustain at 11% in current quarter and beyond? (C.A. Garvit Goyal, Serene Alpha)
- Answer: Current quarter experiencing similar margin profile and numbers; margins expected to remain at this level through FY27, with further expansion in following years once Dahej achieves full-year operation at higher margin profile. (Aniruddh Jhunjhunwala, MD & CEO)
Dahej Project Ramp-Up & Utilization
- Question: How fast can the Dahej facility ramp up, and what is FY28 guidance? (C.A. Garvit Goyal, Serene Alpha)
- Answer: Commissioning in Q3 (November); FY28 utilization of 50–60% (minimum), FY29 70–80% after which phase 2 construction begins. Management revised earlier guidance (65–70%) downward for conservatism due to project shifting from H1 to Q3 start. (Aniruddh Jhunjhunwala, MD & CEO)
- Question: What is the expected customer mix at Dahej? (Vinit Thakur, Plus91)
- Answer: Mix will be roughly 60% tire and 40% others (ceramics, agriculture, specialty chemicals); two of India's largest tire companies are within 10–15 km of the plant. (Aniruddh Jhunjhunwala, MD & CEO)
Margins & Value-Added Product Mix
- Question: Can we expect 13–14% EBITDA margins by FY29? What is driving the higher 14–15% guidance? (Disha Chordia, Sapphire Capital / Deep Gandhi, ithought PMS)
- Answer: Yes, targeting 14–15% EBITDA going forward (raised from earlier 13–14%). Drivers: new product launches (ZRA patent pending, JGTUR), higher realizations from specialized products, and Dahej's higher-margin contribution on a blended basis. Management also noted cost optimization initiatives during the geopolitical crisis are sustainable and will accrue over longer periods. (Aniruddh Jhunjhunwala, MD & CEO)
Inventory Gains & Zinc Price Impact
- Question: Can you quantify inventory gains this quarter? Will higher zinc prices (up another 6–7% June–August) drive higher inventory gains in Q2? (Disha Chordia, Sapphire Capital / Deep Gandhi, ithought PMS)
- Answer: Inventory gains not that significant and difficult to quantify; margin improvement is a function of multiple factors. Management declined to project Q2 inventory gains, but noted current quarter is experiencing similar margin profile. Company is "neutral to zinc prices" — pass-through mechanism ensures price changes don't materially impact margins. (Aniruddh Jhunjhunwala, MD & CEO / Anuj Jhunjhunwala, CFO)
Ceramics Market Entry
- Question: How is the ceramics market seeding progressing ahead of expansion? What are approval cycles vs tire? (Vinit Thakur, Plus91)
- Answer: Customer relationships already established over past year+; ceramic approval cycles are 1–3 months vs ~5 years for tires. Ramp-up expected to be quick once Dahej is operational. (Aniruddh Jhunjhunwala, MD & CEO)
Recycled Rubber Project (JGTUR)
- Question: Can you provide clarity on JGTUR capex, revenue potential, and timelines? (Deep Gandhi, ithought PMS)
- Answer: Pilot trials completed with positive customer response; working on product optimization with key customers. Commercial plan (capex, capacity, timeline, revenue) will be shared at an appropriate time. Expected commercial start within next 12 months. Product addresses tire industry's ESG/circularity commitments—100% recycled rubber plus 100% recycled zinc oxide positioning. (Aniruddh Jhunjhunwala, MD & CEO)
Geopolitical Crisis & Competitive Positioning
- Question: Has the geopolitical supply chain disruption helped shift customers from unorganized/smaller players to market leaders like JGC? (Shriyaz Chen, 3A Capital)
- Answer: Yes — every crisis creates opportunity. Financial strength and global supplier relationships built customer confidence; customers running at near-full capacity increasingly place larger business with JGC. This is a structural gain expected to persist. (Aniruddh Jhunjhunwala, MD & CEO)
Zinc Sulfate & Circularity
- Question: What is the growth plan for zinc sulfate and other specialized products? (Lakshmikant, Individual Investor)
- Answer: Zinc sulfate growing in South India where there are no large players; the primary raw material is a byproduct of zinc oxide production, creating structural cost advantage and full circularity. Western India expansion planned post-Dahej. R&D focus on differentiated, sticky, high-technology products (ZRA, JGTUR, patent-pending chemical) will drive future growth. (Aniruddh Jhunjhunwala, MD & CEO)
Dahej Phase 2 & Capacity Expansion Triggers
- Question: At what utilization level should we expect further capacity expansion? (Vinit Thakur, Plus91)
- Answer: Company historically expands when utilization hits late 70s–early 80s; Dahej phase 2 construction expected to begin once phase 1 reaches ~80% utilization (targeted FY29). (Anuj Jhunjhunwala, CFO / Aniruddh Jhunjhunwala, MD & CEO)
Key Takeaway
JG Chemicals delivered its best-ever quarterly performance in Q1 FY27, with revenue of ₹315.7 crores (+44.8% YoY, +10.3% QoQ), EBITDA of ₹36.3 crores (11.5% margin, up 86 bps YoY), and PAT of ₹26.1 crores (8.27% margin). Growth was driven by robust demand across tire and non-rubber segments, double-digit volume growth, improved product mix, and sustainable cost optimization initiatives. The company is executing a significant capacity expansion: Dahej greenfield (40,000+ MTPA, ₹100 crores capex, ₹900 crores revenue potential) with phase 1 (15,000–17,000 tonnes) commissioning targeted for November 2026, alongside a ~5,000-tonne Naidupeta debottlenecking. Management raised FY29 EBITDA margin guidance to 14–15% on value-added product mix and Dahej's higher-margin contribution, while conservatively guiding Dahej FY28 utilization at 50–60%. New product launches (Lab Pure Zinc Oxide, JDZRA), a patent-pending chemical with a premier Indian research institute, JGTUR recycled rubber project, and a Dubai subsidiary for sourcing/distribution position the company for sustained growth. Key watch points include Dahej commissioning and stabilization timeline (Q3 FY27), geopolitical supply chain risk for zinc ash, sustained margin trajectory amid zinc price volatility, and ramp-up execution toward 70–80% utilization by FY29 before phase 2 expansion.