1. At a Glance
J.G. Chemicals Ltd is India’s largest zinc oxide manufacturer with a 30% market share and rising. Using the premium “French process” (which sounds fancier than it pays dividends), the company serves multiple end-user industries from rubber to pharma to ceramics. Profits have more than doubled in FY25, ROCE has rebounded to 20.3%, and the company is debt-free. With recent land purchases in Gujarat and Andhra Pradesh, J.G. Chemicals is clearly laying ground for expansion — literally. But at a P/E of 28 and a stock already up 80% in a year, is this zinc star getting a little… oxidized?
2. Hook: 🧼 From Slippers to Satellites, They’re in Everything But News
- No social media noise. No aggressive investor decks. No celebrity board members.
- But quietly, this ₹1,800 Cr company is India’s zinc oxide mafia don.
- 30% market share in a niche chemical most people think only goes in white paints (spoiler: it goes into everything).
- While everyone’s chasing flashy AI stocks, J.G. Chemicals is compounding silently in the background like a Warren Buffett fantasy.
3. WTF Do They Even Do? (Business Model)
- Core Product: Zinc Oxide, used in:
- Tyres (Rubber industry – largest chunk of revenue)
- Ceramics
- Paints & Coatings
- Pharmaceuticals
- Animal feed
- Processes: Uses French process, which gives higher purity zinc oxide vs cheaper American process.
- Plants: 3 manufacturing facilities — with expansion plans underway in Dahej (Gujarat) and Andhra Pradesh.
- 80+ grades of zinc oxide (not joking) — from basic white powder to pharma-grade fine particles.
4. Financials: Profit, Margins, ROE, Growth 📈
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 434 | 611 | 782 | 666 | 848 |
| Net Profit (₹ Cr) | 29 | 43 | 57 | 32 | 67 |
| Net Profit Growth YoY | — | +48% | +33% | -44% | +109% |
| OPM % | 10% | 9% | 10% | 7% | 10% |
| ROE % | 19% | 16% | 15% | 15% | 14.8% |
| ROCE % | 27–30% | 30% | 14% | 20.3% |
🧠 TL;DR:
- FY24 was a dip year (margin compression), but FY25 made a strong comeback.
- ROE, OPM and PAT back to historical highs.
- EPS FY25 = ₹16.34
5. Valuation: Cheap, Meh, or Crack?
- CMP: ₹459
- P/E (TTM): 28.1x
- Book Value: ₹119 → P/BV = 3.8x
- Market Cap: ₹1,800 Cr
- No dividend yet (0% payout) – reinvestment mode
📊 Fair Value Calculation:
Let’s assume FY26E EPS = ₹20.5 (20% growth)
- At 20x = ₹410
- At 25x = ₹512
- EduInvesting FV Range = ₹410 – ₹510
🎭 Verdict: Valuation’s not cheap-cheap. It’s a “You know what you’re buying” zone.
6. What’s Cooking – News, Triggers, Drama 🌶️
- 🔑 Land Buys:
- May 2025: 11.43 acres in Dahej (Gujarat) for ₹24.05 Cr
- May 2024: 2.96 acres in Andhra Pradesh for ₹2.34 Cr
- 🧪 Both acquisitions aimed at capacity expansion & entry into new zones (West India focus)
- 💼 QIP/Debt-Free Growth? Not yet announced — expansion likely via internal accruals.
- 🔬 Also planning product line diversification into more specialty zinc applications.
7. Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Total Equity | ₹208 Cr | ₹398 Cr | ₹465 Cr |
| Total Debt | ₹70 Cr | ₹14 Cr | ₹0 Cr ✅ |
| Cash & Investments | ₹3 Cr | ₹86 Cr | ₹102 Cr |
| Net Debt | ₹67 Cr | ₹-72 Cr | ₹-102 Cr |
🟢 Dream: No leverage.
🟢 Reality: Debt-free + cash-rich expansion mode.
8. Cash Flow – Sab Number Game Hai 💸
| Year | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Cash |
|---|---|---|---|---|
| FY23 | ₹31 | ₹-5 | ₹-29 | ₹-2 |
| FY24 | ₹76 | ₹-140 | ₹107 | ₹43 |
| FY25 | ₹-11 | ₹25 | ₹-29 | ₹-15 |
- FY25 CFO negative due to inventory & working capital spike (cash stuck in operations)
- But company still maintains positive cash on hand
🔍 Not alarming yet. But if cash burn continues in FY26, eyebrows will rise.
9. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROCE | 20.3% ✅ |
| ROE | 14.8% |
| Debtor Days | 61 |
| Inventory Days | 60 |
| Payables Days | 9 |
| Cash Conversion Cycle | 112 days 😬 |
| Working Capital Days | 136 |
📌 TL;DR:
- Strong return ratios.
- But CCC of 112 days = working capital intensive ops = monitor receivables + inventory management
10. P&L Breakdown – Show Me the Money 🧾
| FY25 Breakdown |
|---|
| Revenue: ₹848 Cr |
| EBITDA: ₹86 Cr |
| EBITDA Margin: 10% |
| Depreciation: ₹5 Cr |
| Interest: ₹1 Cr |
| Other Income: ₹10 Cr |
| PBT: ₹90 Cr |
| PAT: ₹67 Cr |
| EPS: ₹16.34 |
🎯 EPS grew >2x YoY. Key driver: Margin expansion + revenue growth.
11. Peer Comparison – Who Else Makes Zinc Dreams?
| Company | P/E | ROCE | OPM | M.Cap (₹ Cr) |
|---|---|---|---|---|
| J.G. Chemicals | 28.1x | 20.3% | 10% | ₹1,800 |
| GHCL | 9.9x | 24% | 27.5% | ₹5,943 |
| Deepak Fertilizers | 23.1x | 16% | 18.7% | ₹21,592 |
| GNFC | 13.7x | 9.6% | 7.8% | ₹8,202 |
| Chemplast Sanmar | Losses | 1.9% | 5.0% | ₹6,774 |
🧠 Insight:
- JG has niche monopoly in zinc oxide, but valuation is premium vs multi-product peers.
- Doesn’t benefit from commodity cycles like GNFC or Deepak Nitrite.
12. Miscellaneous – Shareholding, Promoters, Moats
- 🧑💼 Promoter Holding: 70.99% (Stable since IPO)
- 🏦 FII + DII: 10%
- 👨👩👧👦 Public: 19.2% (47k+ shareholders)
- 🧱 Moat:
- Process purity (French tech)
- Grade variety
- Deep client relationships (Rubber & pharma OEMs)
🧼 Clean governance record, frequent disclosures, and recent land bank additions — all green flags.
13. 🧑⚖️ EduInvesting Verdict™
J.G. Chemicals Ltd = “Zinc wali company” that did everything right but said nothing loudly.
✅ Niche monopoly
✅ Debt-free with 20%+ ROCE
✅ FY25 profit doubled
✅ Expansion groundwork laid
❌ No dividend policy
❌ Working capital stress building
❌ Not super cheap anymore
🧮 EduFair Value Range: ₹410 – ₹510 (Based on 20x–25x FY26E EPS)
💥 Verdict: If you missed the zinc rally earlier, don’t chase it blindly now — but definitely watch this one like a hawk with a chemistry degree.
✍️ Written by Prashant | 📅 July 5, 2025
Tags: J.G. Chemicals, zinc oxide, specialty chemicals, Gujarat expansion, Dahej land, SME IPO, French process, chemical monopoly, EduInvesting, dividend-less wonders, financial analysis
