Jyoti Resins and Adhesives Limited (514448) Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the H1 FY '26 Post Earnings Conference Call of Jyoti Resins and Adhesives Limited. Today on the call from the management, we have with us Mr. Utkarsh Patel, Managing Director; and Mr. Samit Shah, CMO. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to brief us about the business and performance highlights for the quarter and period ended September 2025, the growth plans and coming -- vision for the coming years, post which we will open the floor for Q&A. Over to the management team.

Good morning, everyone, and thank you for joining us. On behalf of the Board and the management team, I would like to extend a warm welcome to all our investors, analysts and stakeholders in quarter 2 FY '26 post earnings call of Jyoti Resins and Adhesives Limited. Despite of heavy and long monsoon season in most of the states and overall soft demand and disturbances in dispatch and delivery chain, we have remained committed to our long-term strategy. This quarter has been one of the stronger performance quarters as compared to previous quarters. We are pleased to share the highlights of our results and discuss the strategy initiatives that are shaping our path forward. As you would have gone through the investor presentations uploaded to the Exchanges, we have delivered 20% volume growth on a year-on-year basis, which we believe is strong delivery considering the extended monsoon this year. Gross revenue, excluding GST, also grew 20% Y-o-Y, driven by this volume growth. EBITDA margin, excluding other income, stood at 27.5% at par with our quarter 1 margins and in line with our broad margin guidance. We have continued advertising, marketing and branding campaign with our brand ambassador, Mr. Pankaj Tripathi, with few TV channels and through digital mediums such as Instagram, Facebook, to provide the necessary push to our pan-India growth plans. We have established our presence in 14 states, and our aim is to widen our offerings in the existing and new states and increase our penetration in existing states. We continue to operate at 60%, 70% capacity utilization rates. We have started work on repairs and maintenance at plant to increase our brownfield capacity by 1,500 tonnes per month over a period of next 6 months, which will take our total capacity from 2,000 tonnes per month to 3,500 tonnes per month, thereby enhancing our ability to produce and sell more, get operating leverage on higher volumes as well as be competitive in the market. The total CapEx expected in this brownfield expansion will be around INR 5 crores to INR 7 crores. Further to this, we are trying to scout land for our next greenfield expansion on the outskirts of the city as we move forward on this, we will keep you updated. Overall, we continue to be focused on reaching INR 500 crore turnover mark over the next 3 years led by volume growth. We also continue to guide for a long-term EBITDA margin range of 25% plus or minus 2%. We are working hard on the ground level as well using all available opportunities for branding, marketing, advertising and trade marketing to scale up and maintain our strong positions. Now I'm opening the floor for the questions.

[Operator Instructions] We'll take the first question from Kevin Vora.

So my first question is I wanted to understand your progress in newer geographies like Uttar Pradesh and Delhi. How has the traction been so far in terms of dealer onboarding and carpenter adoption? Since I think you're applying the same go-to-market strategy that worked well in Gujarat, what are the key challenges you are facing in the states? And how do you see these markets scaling over the next 12 to 18 months?

So as we are generating the revenue of almost 80%, 85% into the existing 5 states. And now we are moving to focus on to the other states. So UP and Delhi is our most prior states in which we want to penetrate more. And the response is actually good last year, and we have almost onboarded more than 650 dealers who are dealing with us and almost more than 50% are -- we got the repeat orders from that. And we have applied the same strategies that we always believe into the pool system, and the tertiary sales. So we are more focusing on how we can -- how we can set the mind of the carpenters who are using the white glue since years and now they have some brands that they can see about the qualities and the service front. So we are focusing on that part that how can we get the engagement with the carpenters by doing the carpenter meets, in-shop meets, and gathering of the carpenters. We are focusing on their community. So these are all the strategies, what we have used in Gujarat. Right now, we are focusing on that part.

And my second question is, we have started noticing Euro holdings with Pankaj Tripathi in several parts of Gujarat, which is great to see. I wanted to check whether this campaign has also been extended to Delhi, UP and so on. And if not, which states are still pending rolled out? Secondly, given this ongoing brand pool, do you think you will end up spending less or more on marketing and promotion than what had earlier been guided? And if possible, could you share the promotion [Technical Difficulty].

Your voice is not clear. Can you speak louder, please?

So his question is, will you continue the kind of branding and holding that we are seeing in Gujarat in the other states, and how much will we continue to spend on this activity.

For the next -- yes, this year and next year, percentage of other revenue, promotion side.

So we have guided for the 7% to 8% revenue, what we want to invest into the brand communications and the trade marketing all put together. But our major focus will be into the trade marketing first, as this business model always depends upon the carpenters pool system. So we want to establish our brand and as -- first into the carpenter mind. So we'll more focus into the trade marketing for the dealers and carpenter. So it is about 7% to 8%, we want to continue for the years for the brand communication and the trade marketing.

We'll take the next question from Smith Gala.

So my first question was the revenue, which we report is like after being adjusted for the rewards, which we give to the competitors, is there a possibility or how does the accounting work to take it directly to the expenses, so that the actual true revenue growth like-to-like with volumes can be seen to the investors.

Sure. So we are on it and we are trying our best, and we are now sitting with the auditors regarding this, how we can give more transparency, but I just want to add into these questions that it is not much different. As an example, if we talk about the quarter 2, that is a difference of only INR 1 crore, around INR 1 or INR 120 crore, INR 120 crores, so it is a percentage-wise if we can see that.

Am I audible?

You are audible. I'm audible?

Yes, yes, yes. So what was the difference between 40% and 20% adjusted revenue growth and 14% revenue growth, which is actual.

No. So that is because of the -- you are seeing the Y-o-Y. So that's why the reason the last quarter 2 was adjusted at that level. So it is a difference. Otherwise, if I'm talking about the redemption.

Actually, last year, the adjustment was significant, whereas this year, it was like, Utkarshji, just said Delhi INR 1 crores, which is why when we adjust with last year, like-to-like gross sales, excluding GST, the growth comes to 20%.

The next question was since -- even with the monsoon this quarter -- much part of the quarter was affected by the monsoon, still, we managed to report a 20% volume growth, and in the last con call, we had said that we are confident about demand, et cetera, picking up post Diwali. So are we bound to see any increase further in the volume growth, maybe to reach 25% -- 25% or 30% levels?

So we have guided for the 20%, and that is the minimum guidance what we want to achieve. And as the monsoon were very disturbed all over the states, the extended monsoon quarter, though we're able to deliver that. So we are very much optimistic for the quarter 3 and quarter 4, now as demand is now started up post Diwali, so yes, we'll try our best that how can we cover in this quarter 3 and quarter 4. But 15%, 20% is the minimum guidance what we are giving right now.

For the full year, 20% will be achieved.

The full year, yes.

So as you mentioned in your opening remarks as well that we are guiding for 25% EBITDA margins over the long term. But after the correction we took after last year because of the ad spend, et cetera, we are still around 27%, 28%. And with the volumes increasing and operating leverage kicking in, should we be able to maintain this 27%, 28% or further margin correction is on the guidance?

No. This year, we'll be able to maintain this 27%, 28%, but this is for the longer-term guidance as we are expecting maybe the the raw material price increase or maybe the competition increase into the market, and we need to pass few discounts to the trades or we need to invest more into the brand communications or trade marketing. So this is all over the very long-term guidance, what I'm giving. But this year, we can say that 27%, 28% EBITDA we can expect.

We'll take the next question from Dhiraj Kaswan. We will move on to Saket Saraogi.

Sir, I had a question regarding the ad spends that we are doing. Could you help me understand like what was the spend last year and what this year we are spending amount wise and percentage-wise, what's the difference between the 2 years regarding like the onboarding of Pankaj Tripathi. So what has been increased.

See, right now, if we talk about the previous years, so that was around 1.5% to 2% around of the revenue. And mostly, we have invested into the trade marketing only. But this time, from the quarter when we have started to invest into the brand communications and the trade marketing both, so initial stage, the quarter 1 was very fruitful regarding that we done the 33 dealer meets and 7 carpenter mega meets. So we have invested into that. And now quarter 2 was the rainy and monsoon seasons and the festival season. So we were not able to invest, and that was not the wiser step if we go for that. So now quarter 3 and quarter 4 is open to do this type of activities. So it is almost around -- right now if we talk about the H1, it is almost 4% to 4.5% of the revenue what we have spent. And now we will go in to increase more into this quarter, quarter 4. So it will be average around 7% to 8% what we want to invest into the trade marketing and brand communications, the revenue.

Sir, like this trade marketing and brand communication, so like we are present in a lot of states. So what kind of brand promotion we are planning, like we're planning for all India-wise or particular state-wise, what is the plan.

So if we talk about the quarter 1 and quarter 2, so in quarter 1, we have associated with the news channels mostly as our TG is the male who has the age of the 25 to 60 years. So they are more with the news. So we invest into the news channels like Aaj Tak, India TV, Zee Business, CNBC. And for the quarter 2, we have continued with the Zee Business and CNBC. And so these are the channels across all the states. So in the media front, we'll more focus into the TV. And also, we are more focusing on to the social media digital marketing campaign where the Facebook -- the more -- the users, the carpenters are more into the Facebook and Insta. So we are focusing on to that. And about the trade marketing, then yes, the carpenter meeting, carpenter gathering the mega meets, the dealer meets, these are the media where we are investing.

So in the news media, sir, like we are doing ads only in particular states or it's like every states where we are present.

No. Right now, it is India level. So it is Aaj Tak and India TV. So that is pan-India level.

So like as in the first part, we have spent 4% to 5%, 4.5% roughly around this -- of the sales on this marketing and ad spend and all. And in the second half, we are planning to take it to average of 7%, 8% yearly. So that means you're taking the upwards of 10% in the second half?

So that -- see, that is depends upon. This is a longer-term guidance that what we are planning to do for that. But we'll monitor about the situations and the things. But we can consider that at least 7% to 8% should be there for the quarter 3 and quarter 4, both. So maybe that can land about maybe 5% to 6% average, all over total revenue, all over year-wise. But yes, we are expecting that at least 7% to 8%, we are targeting for quarter 3 and quarter 2.

Just 1 accounting question like this ad spend and all we give it in the other expenses head or in the sales promotion these kinds of head, where is this expense?

Other expenses.

Sir, we have a question in chat from Dhiraj Kaswan. Sir, his question is Pidilite had around 10% volume growth in H1 with almost no change in value terms. We have had 20% volume growth, but the revenue increase is lower. Are we having value degrowth due to higher discounts offer than last year for expansion?

No. See, we cannot compare at that level because they have more than 800 products. So it's a different categories, different products, so that can give this type of results where the volume and revenue, maybe the difference is that. So in our case, we are into the white glue product and a single product. So it is like that.

Plus, we've also clarified for the adjustment that is there this year versus last year. So if you see on an adjusted basis, then the revenue comes to 20%.

And sir his another question is can the management provide production volume for H1 and the past 3 years in metric tons to analyze the revenue realization for the company?

We can separately provide that. Right now on this con call, I don't have the exact data for that, so we can separately provide that.

So now the next question is from Pavan Kumar.

Sir, I just wanted to understand, I understand the brand promotion activities. But are we working on even making our product portfolio complete because that is one of the features customers seem to be looking into while purchasing the product overall.

See, all over, we are focusing on the white glue. So what the entire range required into the application of gluing the furniture by the carpenters. So we have the entire range. So we are now into the OEMs also the modular furniture, the modular kitchen makers, who requires a glue that is also we have the 3 range into that. We have the range into the PVC -- for the PVC edge banding and PVC sheets also that stick to the MDF and plywood. And of course, this for the wood and plywood and MDF and veneer and laminate. So we have the entire range for the furniture glowing. So we want to stick to this product portfolio right now, at least 4, 5 years. So we are targeting ourselves that at least this is INR 7,000 crores of market. So we want to reach first INR 1,000 crores into this particular segment. Then after we can think about adding a few products into the portfolio.

So what you are saying is from your point of view, as of now, you believe that the product portfolio that is there with the -- with our sales force is enough to meet whatever is the requirement on the ground.

Yes. It is very enough. As I mentioned that this is INR 7,000 crores of market and it's a huge opportunity lying into the existing market. So we want to cover that first, and we don't want to lose our focus by adding and as I mentioned that our core focus are into the carpenters. So what the carpenters are using and what the required for the application of the furniture glueing that entire range we have with us. So we want to continue with this.

And can you just throw some light on, let's say, our older geographies, volume growth versus the newer geographies we might have entered in the past 2 years. Can you give us an idea of what have been the growth rates in terms of volumes there?

So I cannot give the detailed information and exact numbers for that on this call. But I'll give the idea that, as I mentioned, that in UP, we are doing good and we are getting the good response. So we are now present into more than 650 counters. And we are present into major cities of UP [Technical Difficulty] the response we are getting. We are more now focusing on to the West Bengal part also, and we have developed a few branches into the North India also. So Punjab, we have presence in Patiala, in Chandigarh, in Haryana, in Ludhiana and in Amritsar also. So these are the major 6, 7 cities in Punjab. So all put together, it's a balanced approach that we are penetrating into the existing mature states also, for the more volume generate into the -- from the existing and more awareness kind of campaign and more present to the shops kind of campaign into the Punjab and West Bengal and UP, Delhi.

Sir, there is 1 more question in the chat from Kevin Gala. Are there any plans for expanding into other product segments?

That I've already answered about that in the previous question.

So sir, we have a follow-up question from Smith Gala.

Yes, thank you for the follow-up. So if -- there was some sound issue. So if I missed the -- if you have addressed this issue, sorry, I'll ask it again at the cost of interpretation. Update on the brownfield expansion and the capacity utilization at the current levels?

So right now, we are utilizing 60%, 70% of our capacity, average sale-wise, and now we are -- we have started the maintenance and few repair parts as this plant is years old. So we have started to improve that part. And within these 2 quarters, we are targeting that we will be ready with the capacity of the 3,500 tonnes per month. So that -- right now, we are at 2,000, and we are adding more 1,500 tonnes per month.

So this will be live in 2 months.

6 months. Next 2 quarters.

Next will be as the organization is growing, and this is slightly a longer-term question. Are we seeing any senior level management being appointed in the future? And what kind of impact will it have on EBITDA margins?

Sure. So Mr. Samit Shah is already on call. He has joined us as our Chief Operating Officer. So if you want to ask some questions, and he can give the guidelines also for the near plans. Samit bhai, you want to add something?

Yes. Smith, basically, as a part of our 2.0 journey for Jyoti Resins, as we are moving on from here for our larger targets, basically. So we are going for -- overall how do we better the -- all the functions basically. So HR is 1 of the key functions, wherein we are definitely going to go for some key talent hiring across the regions to strengthen our presence and to improve the way the working pattern also. And we are also adding into CRMs. We are also adding into various other like app development and all. So we are investing in across various functions basically to strengthen our SOPs and governance basically the way we conduct business and to go in a more proaction approach going forward. So that's very much on card, various level hiring is going to happen for sure.

And will it have any impact on the EBITDA margins going forward?

It will be momentarily. Yes, I mean as we are building new territories simultaneously protecting our market share in existing markets. And as we hire new talent, they'll take some time to get settled in the system and start performing and start delivering results. So momentarily, you can see a slight impact on that. However, it's having a great output. I mean we can expect great output with these initiatives in the long run. So these entire efforts are -- we are doing as seeding things are happening to have better results in the coming quarters.