At a Glance
Nitta Gelatin India Ltd (NGIL), the bone-to-beauty transformer, posted Q1 FY26 revenue ₹139 Cr (+8% YoY) and PAT ₹19 Cr (flat YoY). Margins held steady at 20% OPM while ROCE stood at a handsome 24.6%. The stock trades at ₹941, with a P/E of 11.3x, making it look like a value play among expensive specialty chemical peers. Meanwhile, management is expanding collagen peptide capacity while dealing with pollution fines, factory closures, and the usual environmental controversies. But hey, profits still smell sweet (unlike the raw material).
Introduction
If you’ve ever wondered how animal bones end up as capsules, gummies, and even anti-aging supplements, meet NGIL. This company takes the less glamorous parts of cattle, runs them through some serious chemistry, and creates high-margin gelatin and collagen products used in pharma, food, and cosmetics. It’s a niche play with global demand – and a local controversy magnet thanks to environmental activists.
Q1 FY26 was stable, but not spectacular. Sales growth is sluggish (5-year CAGR of 9%), yet profit growth is solid (5-year CAGR 46%). Clearly, margin expansion is doing the heavy lifting.
Business Model (WTF Do They Even Do?)
- Gelatin – used in pharma capsules, food industry (think jelly), photography (yes, still used), etc.
- Collagen Peptides – the hot beauty & health ingredient, fetching high margins.
- Ossein & DCP – by-products sold to other industries.
The company sources animal bones (mostly bovine), processes them into ossein, then gelatin. Collagen peptides are a higher-value play, and NGIL is ramping up capacity here to capture the wellness market.
Financials Overview
Q1 FY26 Snapshot:
- Revenue: ₹139 Cr
- Operating Profit: ₹27 Cr
- OPM: 20%
- Net Profit: ₹19 Cr
- EPS: ₹21.1
FY25:
- Revenue: ₹533 Cr
- PAT: ₹84 Cr
- EPS: ₹92.4
Commentary: Despite flat sales, profitability remains strong due to better product mix (more collagen, less commodity gelatin). The company is almost debt-free, adding to its appeal.
Valuation
1. P/E Method
- EPS (FY25) ₹92.4
- CMP ₹941 → P/E = 10.2x (close to reported 11.3x)
Peers like Pidilite trade at 69x, making NGIL look dirt cheap.
2. EV/EBITDA
- FY25 EBITDA ≈ ₹105 Cr
- EV ≈ Market Cap ₹855 Cr – Cash minimal – Debt ₹31 Cr → EV ≈ ₹886 Cr
- EV/EBITDA ≈ 8.4x
3. DCF (Quick & Dirty)
- Assume 8% growth, 12% discount, 3% terminal.
- Fair Value Range: ₹850 – ₹1,050
Verdict: Valuation attractive, but low growth caps upside.
What’s Cooking – News, Triggers, Drama
- Capacity Expansion: Collagen peptide plant expansion ₹200 Cr approved.
- Pollution Issues: Subsidiary Bamni Proteins ordered to shut due to pollution.
- Rights Issue Withdrawn: Management confident on internal accruals.
- Management Shuffle: New MD and CTO appointed in FY24.
- Global Demand: Collagen boom in health & wellness continues to be a tailwind.
Balance Sheet – Bone Solid?
| Assets | ₹ Cr |
|---|---|
| Total Assets | 515 |
| Fixed Assets | 117 |
| Investments | 7 |
| Other Assets | 372 |
| Liabilities | ₹ Cr |
|---|---|
| Borrowings | 31 |
| Other Liabilities | 62 |
| Net Worth | 422 |
Remark: Almost debt-free, reserves building, strong asset-light growth.
Cash Flow – Sab Number Game Hai
| Year | Ops (₹ Cr) | Investing (₹ Cr) | Financing (₹ Cr) |
|---|---|---|---|
| FY23 | 101 | -18 | -55 |
| FY24 | 94 | -54 | -36 |
| FY25 | 75 | -9 | 11 |
Remark: Operating cash slightly dipping, but expansion funded comfortably.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 19.6% |
| ROCE | 24.6% |
| P/E | 11.3x |
| PAT Margin | 19% |
| D/E | 0.07x |
Remark: Ratios show a highly efficient small-cap with room to rerate.
P&L Breakdown – Show Me the Money
| Year | Revenue ₹ Cr | EBITDA ₹ Cr | PAT ₹ Cr |
|---|---|---|---|
| FY23 | 565 | 114 | 74 |
| FY24 | 533 | 105 | 84 |
| FY25 | 533 | 103 | 84 |
| TTM | 537 | 103 | 84 |
Remark: Growth stalled, but margins & profits intact.
Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Pidilite | 13,140 | 2,093 | 69x |
| Deepak Nitrite | 8,281 | 680 | 36x |
| Vinati Organics | 2,248 | 415 | 45x |
| Nitta Gelatin | 537 | 84 | 11x |
Remark: NGIL is the undervalued stepchild of the specialty chemicals world.
Miscellaneous – Shareholding, Promoters
- Promoters: 74.49% (steady, Japanese parent strong)
- DIIs: 0.35% (tiny)
- Public: 25.17%
- No major FII play, making this a domestic-driven stock.
EduInvesting Verdict™
Nitta Gelatin is a niche player with strong margins and high promoter backing. While growth is slow, collagen expansion can be a game changer. Environmental risks linger, but valuation offers comfort. It’s not a multibagger-in-waiting, but a steady compounder for those with patience (and no ethical qualms about bones).
SWOT
- Strengths: Debt-free, high margins, collagen growth potential.
- Weaknesses: Low sales growth, environmental controversies.
- Opportunities: Rising global demand for collagen supplements.
- Threats: ESG concerns, regulatory fines, raw material volatility.
Final Word:
A classic case of value with optionality. If collagen clicks, NGIL rerates. If not, it still pays to hold.
Written by EduInvesting Team | 01 Aug 2025
SEO Tags
Nitta Gelatin, Collagen Peptides, Q1 FY26 Results, Specialty Chemicals, Value Stock
