Jyoti Resins and Adhesives LtdQ3 FY24Chemicals & Petrochemicals

Jyoti Resins and Adhesives Ltd

Q3 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Order

N/A

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Revenue guidance

Category 2

→Targeting revenue of ₹375 crore to ₹400 crore in FY '26.
→Aiming for 15% to 20% volume growth in the current year despite softer Q2.
→Expecting to sustain 20% to 25% volume growth over the next few years.
→Plan to double revenue to ₹500 crore by around FY '27-'28 with capacity expansion.
→Capacity to nearly double through Brownfield expansion within six months to support ₹500 crore top line.
→Long-term EBITDA margin guidance is 22% to 25%.
→Planning to invest 3% to 4% in sales promotion discounts and another 3% to 4% in branding and advertising gradually from Q3 FY25 onwards.
→Focus on expanding distribution network and increasing sales and marketing team strength to support growth.

Category 3

→Jyoti Resins targets revenue of ₹375-₹400 crore for FY26, indicating growth from current levels.
→The company is optimistic about achieving 15-20% volume growth in FY25 and aims around 20-25% volume growth longer term.
→Operating profit margins are expected to stabilize around 28-30% by the end of FY25.
→Management guides for an EBITDA margin range of 22-25% over the longer term.
→Expansion plans through Brownfield capacity enhancement are expected to nearly double capacity, enabling revenues to reach ₹500 crore by 2027.
→No external debt is planned for expansion; growth will be funded through internal accruals.
→Profitability is expected to improve due to increased premium product mix and efficient cost management.
→EBITDA margins currently strong (around 29-30%) are expected to sustain through the current year.

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→The company plans to fund its capacity expansion using internal cash accruals and possibly debt.
→No external debt is currently needed as they have substantial cash and cash equivalents (~₹137 crores).
→Expansion through Brownfield or Greenfield projects will be financed internally without reliance on new external debt.
→There is no mention or indication of any equity fundraising in the discussed call.
→The focus is on utilizing available cash and prudent use of debt for growth.

→The transcript does not explicitly mention the current or expected order book or pending orders in specific numbers.
→However, it is noted that in Q2, demand was slow but market conditions are improving with bullish outlook for Q3 and Q4.
→Repeat orders from dealers, especially in newer territories like UP, Punjab, Varanasi, Jhansi, and Lucknow, are increasing, indicating good response and growing order inflow.
→The company focuses on tertiary distribution and has strong efforts in recruitment and training to sustain quality and service, helping in repeat business.
→Expansion plans include doubling capacity in the next six months, positioning the company to handle higher order volumes, targeting ₹375-400 crore revenue in FY '26.
→Overall, demand and order inflow seem to be improving but exact order book status is not specified.

Yes

→Jyoti Resins plans a Brownfield expansion with an investment of ₹5 to ₹10 crore within the next six months to double current plant capacity, enabling revenue potential of around ₹400 to ₹500 crore.
→Environment clearance for Brownfield expansion is expected within two months, with capacity ready for commercial production by June-July 2025.
→A Greenfield project is planned with an investment of ₹40 to ₹45 crore, including land, building, machinery, and packing, aiming at ₹1,200 crore revenue; expected operational readiness by 2027-28.
→Expansion will be funded through internal cash accruals and not through external debt, supported by ₹137 crore cash and equivalents on hand.
→Additional storage capacity near the factory is planned on a lease basis to support increased production.
→Recruitment and strengthening sales and marketing teams are ongoing to support growth and distribution expansion.

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