Jyoti Resins and Adhesives: A High ROCE, High ROE Small-Cap Stock Guiding 25% Growth – Is This Chemical Gem on Your Watchlist Yet?
Introduction
Jyoti Resins and Adhesives : In the ever-evolving Indian chemical sector, one small-cap stock has steadily carved a niche for itself through innovation, consistency, and strategic expansion—Jyoti Resins and Adhesives Limited. Specialising in advanced resin and adhesive technologies, the company is now setting ambitious targets, forecasting 20–25% annual revenue growth for FY26 and beyond. Despite being under the radar for some investors, this small-cap player—with impressive ROCE of 50% and ROE of 37.4%—deserves a spot on your watchlist.
Let’s break down what makes Jyoti Resins a compelling story for growth-focused investors.
Business Outlook: Targeting a ₹500 Crore Revenue Milestone
Jyoti Resins plans to scale its revenue to ₹360–370 crore by FY26 and ultimately touch ₹450–500 crore by FY27. This translates to a consistent 20–25% YoY growth, backed by a clear roadmap that includes expanding geographical reach, improving sales volume, and increasing B2B penetration.
Currently present in 14 states, the company plans to enter 3–4 new states, aiming to build profitable operations in these new regions over three years. Mature states already generate ₹25–30 crore in revenue, have 400–600 retailers, and enjoy 20–30% market share.
B2B Expansion Strategy
Though currently contributing just 5% of overall revenue, the B2B segment is expected to grow to 10–15% over the next 2–3 years. Targeting modular furniture manufacturers, this segment offers a volume-driven opportunity, though with slightly lower margins (EBITDA 15–20%) compared to its core B2C business.
Capacity Enhancement & Capex Plans
Jyoti Resins is expanding its current production capacity by 1,500 tonnes/month, taking it to 3,500 tonnes/month by FY25-end. This expansion, requiring a ₹5–7 crore capex, is expected to support up to ₹700 crore in revenue at 85% utilization—without the need for significant capex until the next greenfield project planned two years down the line.
Recent Performance: Steady Growth Across Metrics
In Q4FY25, the company clocked ₹78.6 crore in revenue, a 10.5% YoY growth and 10.34% QoQ rise. Net profit stood at ₹19.78 crore, up 5.4% YoY and 3.8% QoQ, reflecting healthy operational leverage and consistent performance.
While receivables rose by 34% YoY to ₹126 crore (due to strong March sales), management expects them to normalise within two months. With a credit cycle of 70–90 days and bad debts under 1%, risk remains well managed.
Challenges to Watch
Despite its strong fundamentals, Jyoti Resins faces some near-term challenges:
- Lower EBITDA margin guidance (25–28%) due to increased advertising.
- Execution risks in new state expansions and dealer onboarding.
- Receivable spike due to end-of-quarter sales push.
- Lower margin profile for B2B segment could impact overall profitability in the short term.
Financial Snapshot
Here’s a look at key financial ratios and figures that highlight Jyoti Resins’ strong fundamentals:
| Metric | Value |
|---|---|
| Market Cap | ₹1,574 Cr |
| Current Price | ₹1,311 |
| 52-Week High / Low | ₹1,635 / ₹1,011 |
| Stock P/E | 21.3 |
| Book Value | ₹191 |
| Dividend Yield | 0.69% |
| ROCE (Return on Capital Employed) | 50.0% |
| ROE (Return on Equity) | 37.4% |
| Face Value | ₹10.0 |
Conclusion: Should You Add Jyoti Resins to Your Watchlist?
With its industry-leading return ratios, aggressive but achievable growth guidance, and strategic expansion plans, Jyoti Resins and Adhesives is certainly a stock worth watching. Though it has underperformed over the past year in terms of stock price, the underlying fundamentals remain robust, and the future outlook is promising.
For long-term investors with a moderate risk appetite, this stock could present a golden opportunity—especially as the company eyes larger revenue milestones, enters new geographies, and builds a stronger B2B portfolio.
🔍 Q&A: Quick Takeaways from the Article
Q1: What is Jyoti Resins and Adhesives’ revenue growth guidance for FY26 and FY27?
A: The company expects revenue of ₹360–370 crore in FY26 and aims for ₹450–500 crore by FY27, implying 20–25% annual growth.
Q2: Why is Jyoti Resins considered a high-quality stock?
A: It has a high ROCE of 50% and ROE of 37.4%, indicating efficient capital use and strong shareholder returns.
Q3: What are the key expansion plans?
A: The company plans to expand into 3–4 new states and increase B2B business share from 5% to 10–15% over the next few years.
Q4: What are the major risks?
A: Higher ad spending may impact margins, and execution in new states could be slower than expected. Also, receivables spiked due to strong Q4 sales.
Q5: Is the stock currently profitable and growing?
A: Yes. Q4FY25 revenue grew 10.5% YoY, and net profit rose 5.4% YoY, with consistent sequential growth.
Q6: What’s the capex plan for FY25?
A: ₹5–7 crore for capacity expansion to 3,500 tonnes/month, supporting future revenue of ₹650–700 crore
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