Source: https://www.bseindia.com/xml-data/corpfiling/AttachLive/2faf0a9e-9367-44ce-a460-ad7f082cc2f0.pdf
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Nitta Gelatin Expansion Plans
- In the past, they talked about increasing their production of Collagen Peptide, a substance they make. They were planning to add 1000 metric tons (MT) of it.
- However, they’ve changed their plans. They looked at the project again because of things happening around the world, like worries about a global economic downturn. These concerns are affecting the demand for Collagen Peptide from customers overseas.
- After discussing it, they decided to increase their Collagen Peptide production by 550 MT per year (on top of the original 1000 MT plan). This means they’ll be making 550 MT more of this substance every year.
- To pay for this increase, they’ll use a mix of things: a Rights Issue (a way to raise money from existing shareholders), their own earnings, and a term loan (a type of loan).
- They’re also thinking about expanding their production of gelatin, another substance they make. But they’ll make a final decision once they’ve finished the plan for it.
The company is changing its plans for making Collagen Peptide, and they’re thinking about expanding another product, gelatin. They’re also figuring out how to pay for these changes.
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You are right, this company pops up on my radar a lot of times. However I have stopped myself due to the risk of potential alternatives and regulation on animal products.
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The alternatives to conventional sources of gelatin will not easily replace the animal source because (1) Vegetable sources are far less nutritional than animal/fish sources. The vegetable source is relatively low in vitamins and essential nutrients. (2) The application needs specific preparation. (3) They cost 3 times that of Gelatin from animal and fish sources.
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@RajeevJ are you still following this company ? If yes, what are your thoughts about the sustainability of their margins and potential risk of regulation and alternatives
Any body has revenue breakup of Gelatin and Collagen peptide ?
What could be the asset turn for this 200 Cr of investment ?
As per their Annual report, price erosion of Gelatin & Collagen is happening. This could impact the rev & margins going forward. Closure of the subsidiary will impact the top line by 10%.
Will watch out 2-3 Quarters for any opportunity for entry
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From Crisil rating update report released yesterday link
“The group plans to incur a capital expenditure (capex) of ~Rs 250 crore over fiscals 2025 and 2026 to expand capacity in its gelatin and collagen peptide unit. It has announced withdrawal of its proposed rights issue of Rs 40 crore to fund the above capex and plans to finance the proposed investment through a mix of internal accrual and external borrowings. Though this could be partly debt-funded, financial risk profile is projected to remain comfortable on the back of expected annual cash accrual of over Rs 50 crore and adequate liquid surplus, which stood at Rs 76 crore as of March 31, 2024.”
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Hi does any one has an update on the latest status of their capacity expansion. Seems they did the bhoomi poojan in April 24 (https://gelatin.in/uploads/userfiles/Letter%20to%20BSE-Press%20Release%20Bhoomi%20Pooja.pdf). However i haven’t seen any spike in their quarterly sales yet, so not sure if the additional capacity has been delivered yet.
Collagen new capex Production will commence mid of 2026
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The collagen capacity expansion from 600 ton to 1150 t/ year is scheduled to start operations in June 2025 as per Nitta Gelatin’s parent company.
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Kudos to the OP for putting forward a great opportunity and hope he stuck to the company throughout the years cause he would have made handsome returns over the years.
Nitta Gelatin India Ltd (NGIL) is a 50-year-old niche manufacturer of edible and pharma-grade gelatin, collagen peptides for nutraceuticals and cosmetics, and byproducts like dicalcium phosphate and chitosan. As part of the century-old Japanese Nitta Gelatin group, NGIL benefits from established technology, strict process discipline, and a reputation that supports both domestic sales to Indian pharma and food companies and exports to Europe and Japan.
Financially, the business is strong, with low debt (debt-to-equity around 0.2×), steady Owner’s Earnings averaging around ₹110 Cr in recent years, and most CapEx funded internally. The real strength of NGIL is its consistent cash generation, customer stickiness due to high validation costs in pharma, and support from its Japanese parent which adds credibility and governance stability. The business also has clear growth drivers: rising demand for collagen peptides globally (8–10% CAGR), increasing capsule consumption in India, and potential in value-added byproducts.
At the current share price of about ₹810, the stock trades at a large discount to intrinsic value which I estimated the business to be worth around ₹2,000 crores, offering a significant margin of safety. Even assuming no growth, intrinsic value of the business still appears comfortably above ₹1,600 crores. Risks include raw material price volatility, environmental regulations, and currency fluctuations, but these are partly mitigated by pass-through mechanisms, ongoing compliance investments, and natural hedges from imports.
Overall, this is a simple, durable business with low debt, real cash earnings, and conservative management, overlooked by the market likely due to its small-cap nature. It fits a classic Buffett-style investment case: understandable operations, a moat from quality and customer relationships, low leverage, and a price well below intrinsic value. The key exit triggers would be a sustained drop in Owner’s Earnings below ₹60–70 Cr, debt exceeding equity, or a decline in governance standards. For a patient investor, NGIL offers the chance to own a fair business at a wonderful price, backed by steady demand and disciplined capital allocation.
As buffett recommends individual investors with small sums to invest in obsure stocks rather than seeling wonderful business at fair valuations, I’ll be investing in the company over a period of one week.
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