JG Chemicals IPO Financial Analysis

JG Chemicals IPO Financial Analysis
JG Chemicals IPO Financial Analysis

by Tanushree Jaiswal Last Updated: Mar 04, 2024 - 07:35 pm 665 Views
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J G Chemicals, founded in 1975 is India's leading manufacturer of zinc oxide. They specialize in producing zinc oxide using the French process, which is the primary method used worldwide by major producers in the Americas, Europe, and Asia. J G Chemicals is set to launch its IPO on 5 March 2024. Below is a summary of the company's business model, strengths, risks and financials to assist investors in making informed decisions.

J G Chemicals IPO Overview

JG Chemicals Ltd, established in 1975 manufactures zinc oxide using the French process and offers over 80 different grades of it. Zinc oxide is widely used in various industries such as ceramics, paints, coatings, pharmaceuticals, electronics, batteries, agrochemicals, fertilizers, specialty chemicals, lubricants, oil and gas and animal feed.

The company operates three manufacturing facilities with two in West Bengal (Jangalpur and Belur) and one in Andhra Pradesh (Naidupeta). The Andhra Pradesh facility is the largest. JG Chemicals Ltd serves to over 200 domestic customers and 50 international clients spanning across more than 10 countries.. Additionally, the company produces zinc sulfate under the Luxmi brand, primarily used in agriculture as a micronutrient fertilizer.

J G Chemicals IPO Strengths

1. The company is the largest zinc oxide manufacturer in India and one of the top ten globally. It has a production capacity of 59,904 metric tons per annum for zinc oxide, 7,056 MTPA for zinc ingots and 10,080 MTPA for zinc sulfate and related chemicals.

2. J G Chemicals holds a strong market position with a diverse customer base, supplying nine of the top ten global tire manufacturers and all of the top eleven Indian tire manufacturers.

3. It has shown robust and steady financial performance with growth of revenue from operations and PAT growth at a CAGR of 34.28% 25% and 40.43% respectively from FY21 to FY23.

J G Chemicals IPO Risk

1. J G Chemicals relies on a few key customers for its revenue. If any of these customers choose not to do business with the company it could negatively impact its business, financial health and overall performance.

2. It relies heavily on selling one main product zinc oxide in different grades. A decrease in demand for this product could negatively impact its business and financial performance.

3. Relies on its subsidiary BDJ Oxides Private Limited for its business operations. Any decline in the performance of this subsidiary could negatively impact the company's overall business, financial health and operational results.

J G Chemicals IPO Details

J G Chemicals IPO is scheduled from 5th March to 7th March 2024. The price band for the IPO has been set between ₹210- ₹221 per share.

Total IPO size (₹Cr) 251.19
Offer for sale (₹Cr) 86.19
Fresh issue (₹Cr) 165.00
Price band (₹) 210-221
Subscription dates 5 March 2024 to 7 March 2024

Financial Performance of J G Chemicals IPO

J G Chemicals profits after taxes were ₹28.80 Crore on March 31, 2021 surged to ₹43.13Crore by March 31, 2022 and continued to rise to ₹56.79 Crore by March 31, 2023 increasing growth reflects an improvement in the company's financial performance between this period.

Period 31 Mar 2023 31 Mar 2022 31 Mar 2021
Assets (in ₹ Crore) 297.79 264.14 209.94
Revenue (in ₹ Crore) 794.19 623.05 440.41
PAT (in ₹ Crore) 56.79 43.13 28.80

J G Chemicals IPO key Ratios

J G Chemicals Return on Equity was 19.70% in FY21 which increased to 25.54% in FY22 and further improved to 25.75% in FY23. ROE measures a company's profitability by evaluating how efficiently it generates profits from the shareholders' equity. A higher ROE represents the company is utilizing its shareholders' equity effectively to generate profits. In the case of J G Chemicals, the increasing trend in ROE over the three fiscal years suggests improved profitability and efficiency in utilizing shareholders' equity which is a positive sign for investors.

Particulars FY23 FY22 FY21
Sales Growth (%) 28.03% 40.78% -
PAT Margins (%) 7.01% 6.53% 5.38%
Return on Equity (%) 25.75% 25.54% 19.70%
Return on Assets (%) 18.47% 15.15% 11.16%
Asset Turnover Ratio (X) 2.63 2.32 2.07
Earnings per share (₹) 17.32 12.61 7.39

J G Chemicals IPO Vs Peers

Among its peers Yasho Industries has the highest EPS of 59.54 whereas J.G.Chemicals has EPS of 17.32, higher EPS is considered good.

Company EPS (Rs.) P/E Ratio
J.G.Chemicals Limited 17.32 -
Rajratan Global Wire
Limited
19.72 33.43
NOCIL Limited 8.95 30.97
Yasho Industries 59.54 30.03

Promoters of J G Chemicals IPO

1. Suresh Jhunjhunwala
2. Anirudh Jhunjhunwala
3. Anuj Jhunjhunwala

Anuj Jhunjhunwala, Anirudh Jhunjhunwala, Suresh Jhunjhunwala are the Promoters of the company currently, they collectively hold 100% of the company's shares post listing promoters holding will decrease to 70.99%

Final Words

This article takes a closer look into J G Chemicals IPO scheduled for subscription from 5th March 2024. It suggests that potential investors thoroughly review the company's details, financials and subscription status before applying for the IPO
 

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About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.

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