Overview of the Business
Jyoti Resins and Adhesives Ltd. is a leading Indian manufacturer specializing in synthetic resin adhesives, particularly wood adhesives marketed under the brand name EURO 7000. Launched in 2006, EURO 7000 has become the second-largest selling wood adhesive brand in India’s retail segment. The company operates in the fast-growing adhesives market, catering primarily to carpentry, furniture-making, and general-purpose bonding applications.
Product Portfolio
- Core Product: EURO 7000, a synthetic resin adhesive, widely used in:
- Woodworking.
- Furniture manufacturing.
- Modular kitchens and decorative woodwork.
Financial Performance (Last 7 Quarters)
| Quarter Ending | Sales (₹ Cr) | Operating Profit (₹ Cr) | OPM (%) | Net Profit (₹ Cr) | EPS (₹) |
|---|---|---|---|---|---|
| Sep 2023 | 63 | 21 | 34% | 16 | 13.48 |
| Jun 2023 | 61 | 21 | 34% | 16 | 13.11 |
| Mar 2023 | 65 | 20 | 31% | 16 | 13.68 |
| Dec 2022 | 67 | 16 | 25% | 12 | 10.12 |
| Sep 2022 | 66 | 13 | 20% | 9 | 7.34 |
| Jun 2022 | 64 | 11 | 17% | 9 | 7.56 |
| Mar 2022 | 57 | 8 | 13% | 7 | 5.77 |
Note: OPM stands for Operating Profit Margin.
These figures highlight consistent revenue growth and significant margin improvement over recent quarters, driven by cost optimization and market penetration efforts.
Growth Prospects
Jyoti Resins is positioned for robust growth due to its strong historical performance and strategic initiatives. The company has achieved a five-year profit growth CAGR of 98.1% and median sales growth of 31.7% over the last decade. Its growth strategy focuses on penetrating under-penetrated markets such as Uttar Pradesh, Delhi, Telangana, and West Bengal. Additionally, the carpenter loyalty program, with over 4 lakh participants, ensures customer retention and repeat business. Sustained margin performance, with operating margins consistently above 30%, reflects efficient cost management and strategic pricing. These factors collectively position the company well for continued expansion in the adhesive market.
Currently, the company has a run-rate topline of ₹250–₹260 crore and EBITDA of ₹75–₹85 crore. After the completion of the brownfield expansion, this topline is expected to double within the next year. The stock is currently available at 22x PE on a TTM basis, reflecting reasonable valuations. The ongoing greenfield expansion, which will take approximately three years, has the potential to take the company’s revenue to over ₹1,000 crore annually. These developments, along with robust execution, make Jyoti Resins a promising player in the adhesive industry.
CapEx Plans
Jyoti Resins has ambitious capacity expansion plans to cater to growing demand. The brownfield expansion aims to double the existing capacity through infrastructure optimization and equipment upgrades, requiring an investment of ₹5–₹10 crore. Expected to be completed by mid-2025, this expansion will enable the company to achieve a revenue potential of ₹500 crore annually in the medium term. Complementing this is the greenfield expansion, which involves building a new state-of-the-art manufacturing facility with an investment of ₹40–₹45 crore. Set to be completed by FY28, this facility is projected to contribute an additional ₹1,200 crore in annual revenue, significantly enhancing the company’s market position. Together, these expansions reflect the company’s commitment to scaling operations and meeting future demand effectively.
Industry Outlook
The growth outlook for the Indian adhesives market is positive, with an expected CAGR of 5%-7% in the coming years. The white glue segment, estimated at ₹6,000 crore, offers significant opportunities for growth. Jyoti Resins aims to capture a substantial share of this market, targeting a ₹1,000 crore topline in the long term. The company’s strategic focus on geographic expansion, full capacity utilization, competitive pricing, and sustainable operations positions it well to capitalize on these opportunities.
Conclusion
In conclusion, Jyoti Resins and Adhesives Ltd. has demonstrated strong financial and operational performance, supported by strategic investments in capacity expansion and market penetration. The dual CapEx approach ensures the company is well-prepared to meet short-term demand growth while positioning itself for long-term leadership in the adhesives market. This balanced approach underscores the company’s commitment to sustainable growth and market leadership.
Disclaimer: I am not a SEBI-registered analyst. Please consult your financial advisor before buying or selling.
