J.G Chemicals is a chemical company manufacturing Zinc Oxide (ZnO) and Zinc Sulphate.
It is the largest zinc oxide manufacturer in India with a 30% market share, and a top-5 global producer, employing the widely adopted French process technology.
Product Application
Rubber (tyre & other rubber products), ceramics, paints & coatings, pharmaceuticals & cosmetics, electronics & batteries, agrochemicals & fertilizers, specialty chemicals, lubricants, oil &gas, and animal feed.
Zinc Oxide plays a crucial role in the tyre manufacturing process. It enhances tyre durability, heat dissipation, UV resistance, and vulcanization. It improves tensile strength, fuel efficiency, and rolling resistance, ensuring better grip, longevity, and performance in passenger, commercial, and specialty tyres.
Manufacturing Facilities
The company operates 3 manufacturing facilities in Jangalpur and Belur, both in Kolkata, West Bengal, and Naidupeta in Nellore District, Andhra Pradesh. Naidupeta is the largest facility, owned and operated by the Material subsidiary. Total capacity is about 70,000 MTPA
Expansion
In May 2025, purchased 11 acresof land in Gujarat (24 Cr) to set up a unit to sell inthe western part of India
Competitive Edge
a) Strong Recycling Technology: Uses 73% secondary zinc, reducing energy consumption by 82% and carbon footprint by 70%.
b) Direct Sales Model: 95%+ of sales are direct to end customers.
c) High Entry Barriers: The Products take Long approval times (4-5 years) for tyre industry, with a stringent regulatory standards (IATF, WHO-GMP).
Leading Supplier Tyre industry companies are the largest consumers of their products. Apart from being a supplier to 9 out of the top 10 global tire manufacturers and to all of the top 11 tire manufacturers in India, they also supply to leading paint manufacturers, footwear players, and cosmetics players in India.
Certification
The company’s material subsidiary BDJ Oxides is the only zinc oxide manufacturing facility in India to have an IATF certification, which is
preferred by tyre manufacturers supplying to original equipment manufacturers.
Financial Highlights (FY25)
- Revenue: ₹848 Cr, a 27% increase from the previous year
- EBITDA: ₹96 Cr (11.3% EBITDA margin )
- Net Profit: 67Cr (7.9% PAT Margin)
- Net Worth: ₹4,59 Cr
Investment Considerations and Valuations
- Mkt cap 1482 Cr | Stock price (5th June 2025): 378
- PE: 23.2 and PEG: 0.61 → reasonable valuations
- Marquee investors → MIT, Carnelian and SBI insurance
- Competitive advantage in a commodity play - long sales cycle, certification, raw material links
- Promoters are young and hungry - 2X revenue goal in 3 years
- Clean track record - no known corporate governance issues
Risks/things to consider
- Assets are around 40Cr, and the company does a turnover of 800+ cr. Very high asset turnover. Not sure how this is possible.
- Are switching costs for the tyre manufacturer high, as claimed by J.G - This needs verification
- Margins and topline vulnerable to Zn prices
- Management does not do any conference calls, so limited information on utilisation
I would appreciate your thoughts on this company.
My views can be biased. I have a small position in the stock.