Jyoti Resins and Adhesives Limited (514448) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the Q3 and 9 months FY '26 Post Earnings Conference Call of Jyoti Resins and Adhesives Limited. Today on the call from the management team we have with us Mr. Utkarsh Patel, Managing Director; Mr. Samit Shah, Chief Operating Officer; and Mr. [indiscernible] Shah, Finance. 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 give us their opening remarks to detail us about the business performance highlights for the period ended December 2025, the growth perspective and vision for the coming years. Post which, we will open the floor for Q&A. Over to the management team.

Ladies and gentlemen, I welcome you all to the quarter 3 FY '26 con call. As you would have seen this quarter was soft in terms of flattish revenue and volume growth. Y-o-Y after 20% volume growth in quarter 2. This quarter witnessed a very soft October, while sales recovered strongly in November and December. Our exit rate in December was very strong, matching our quarter 3 growth. In quarter 4, we aim to cover a significant lost ground. On the balance sheet front, we continue to have a strong cash and bank balance and continue to generate incremental cash flows every year, which we are investing back into the business with focused ATL and BTL spreads. We, Eurotean, wish to assure you that we are working hard and setting up the right building blocks for the next level of growth to achieve our first target INR 500 crores revenue target. We are continuously aiming to increase our market share in existing states as well as increase our footprint in new states. Now we are opening the floor for the question and answers.

Thank you, sir, for the opening remarks. [Operator Instructions] We'll take the first question from Keshav Garg.

So Mr. Patel, I'm your long-standing investor, and I'm very disappointed with the numbers. I mean, operating performance is one thing. And our revenue and EBITDA is flat since FY '24 and whatever extra and spend we are doing, it is not reflecting in the numbers. So -- but be that as it may, I can take at face value, whatever you are saying that, I mean, the demand conditions were soft and you are making efforts. I appreciate that, but our share price is about to go into triple digits now. And the stock is trading at a really, I mean, nobody believes your numbers. That is the bottom line. Anybody I discuss your stock, nobody believes your numbers. So sir, and you are not open to getting some reputed auditor also. So now that we are cash rich at least do a share buyback so that there can be confidence in your stock that the numbers are real. And since anyway, our EPS is stagnant because profits are stagnant, if you do a share buyback, the number of shares will reduce and the earning per share will increase. So -- and that will basically restore the confidence of the investor community in the stock. So what is your opinion on this?

So Keshav, you are very right. since last 3, 4 quarters, we are saying that the unit economics is very good. If we talk about the EBITDA or PAT, but revenue growth, we are not generated that much growth level. But as we go with history of Euro [Foreign Language] But we are assuming that we need that fund to deploy into the business actually because we have just started. [Foreign Language] We are first adhesives brand [Foreign Language] And also, we have made the strong ground for the trade marketing also. Recently [Foreign Language] So I suggest to take it at that level, a B2C business, it will take the time to reflect into the numbers, what efforts we are making, it will take the time for that. As you can see, [Foreign Language] but this is the matter of the time. That was really surprise for us into the quarter 3 beginning. [Foreign Language] So that is the reason for that.

[Foreign Language] And in any case, even [Foreign Language] again, maximum buyback the company can do is INR 56 crores, 1/4 of the net worth. And we have INR 170 crores lying with us. And then we have internal accruals also. And stock is trading at basically 11x EBITDA. [Foreign Language] So sir, that is what the doubt is.

[Foreign Language]. And internally, [indiscernible] will look positive around that. What we can do. Thank you, Keshav.

We take the next question from Smith Gala.

So you mentioned that October was a very soft quarter and the run rate for December was back on track what you are targeting for, which means that 20% to 25% volume growth was achieved in December and November was also a good month. So -- but October, so flat, there was no sales that the company is reporting flat volumes for the quarter. And we have also been deploying the strategy of heavy marketing expenditure getting a brand ambassador. And now it is not showing results from the past 8 months, where we have seen other advertising policies or theories or things which can be done and where we show a very short turnaround time in 1 to 2 months the advertising results start showing. This is cutting our margins from 28%, 29% to 25%. And still, we are wanting to continue the strategy, which is clearly not delivering. So why is management so adamant on continuing this sort of strategy, which is giving us such a big hit on the P&L?

So Smith, it is not about anything we are adamant on. We are working different -- working on the different strategies also. But see, something -- some times, we believe in ourselves and what we have experienced in 17 years that confidence we have. So it's about the replica in the execution. See as a central and [Foreign Language] has delivered a strong number. So [Foreign Language]. So we are correcting that level. [Foreign Language] It will reflect on after a few quarters, not in the 1 quarter.

[Foreign Language]

[Foreign Language] So it was also a good number, [Foreign Language] July, August, September is always long monsoons and festival seasons. So quarter 2 [Foreign Language] So that is not in our hand, but we are trying best to cover up into the quarter 4 for that.

[Foreign Language] we are showing that we have the sources to deploy [Foreign Language] they are coming in with big pockets, so whatever we deploy may not be actually enough rather than we should always look for what we are best at. I think -- my comment.

[Foreign Language] So if you get any chance to check the channels, I really appreciate [Foreign Language] So efforts are on the -- 360-degree efforts we are making for that.

[Foreign Language]

[Foreign Language] So we don't want to go for that very small CapEx amount. [Foreign Language] Otherwise, we want to invest into the -- more into the trade rather than the brand communications. [Foreign Language] So we are going very strategically into the spending. It's not like a conservative thinking, but it is very strategic, what we are doing.

We'll take the next question from Aachal Pal.

Yes. So firstly, I wanted to ask where are we seeing in which market we are seeing the challenges or are we facing any pricing pressure because if I see the peers like Pidilite, Astral, Jubilant, almost all have reported mid-double-digit revenue growth. So just wanted to have a look like in which markets we are facing the challenges.

See, first of Aachal, it is a very multi-businesses they have. I cannot comment on regarding you...

No. I'm -- so this double-digit growth that I have seen that is in only adhesive business I'm talking about. I have not considered other businesses.

Right. But I just want to share you some details about the adhesives industry. They are more into the epoxies also, cyano-adhesives, construction chemical, water proof adhesives, tile adhesives. So it's different adhesives, and we are into the white glue only. But you are very right, this is not any excuse that they have delivered and we are -- because of so and so reason. Yes, of course, we have not delivered that much share of number in quarter 3. But as I explain that [Foreign Language] so it is taking some time for that, that is the only reason.

So there is no pricing pressure we are facing, right?

Sorry.

There is no pricing pressure that we are facing right now.

It is not about pricing pressure. It is about the competitions [Foreign Language] but we learnt from that different experience what we have [Foreign Language] and that niche market what we have created into the carpenter and dealer side. So [Foreign Language] we are improving day-to-day business.

And how much the advertisement spend we have done this quarter and how much we are targeting for the year.

For the 9 months, we have done almost 4%, 4.5% of ATL, BTL. So that we also want to take to the 7% to 8% around of revenue.

And sir, just wanted to understand, like how much margin are they giving to our retailers in the new market versus our old markets?

For the Euro, we are giving 8% to 13% for the dealers also and 8% to 13% for the carpenters also. So that depends upon the older and new market. So if it is a new market, then we go higher to penetrate more. And where the brand is very much established, then it is 8% to 9%, around.

Sir, last question is on EBITDA margin. So I have seen the peer's also. So we are at a very good EBITDA margin, like 25% plus whereas if I see Pidilite, Astral, and Jubilant, they are like around -- Jubilant is around 7% to 8%, where Astral is 16% to 17%. So what are the right things we are doing that we are able to maintain this kind of margin? And also, is this margin is sustainable going forward when we are scaling the business?

See, first always, I am saying that this is the reason that we have been very focused for the white glue, and we want to build our brand into the white segment only. So that is the one reason then. Second is we have put always our employee and customer into the core. So what strategies and whatever policies we design, we always focus about their benefits and for the long-term relationship with them. And also, we have controlled our expenses. We spend each and every money very. We don't flood our money in any kind of [Foreign Language] due to the future plans. So that we are very much controlled into that. [Foreign Language] So that can give us INR 500 crore of revenue.

We'll take the next Vatsal Shah.

So there are 2 specific questions, which I would like to ask. So if we see, as Utkarsh, you had mentioned that last 3 years had been pretty good in terms of how the business has scaled. So if I talk of the last 3 years in particular, last 12 to 14 quarters, one question has been the decreasing EBITDA margins, which has been consistently decreasing from the range of 32% to 34% to almost 25%, 26% now. So is it just because of geographic expansion and sales promotion strategy that our margins have been decreasing? Or is it because of competition also. So could you just give some more clarity on that? And second question, could you provide specific sales growth numbers for your top 3 states, which is Rajasthan, Gujarat and Maharashtra. If I'm incorrect -- mistaken, please correct, but your top 3 states growth numbers over the last Y-o-Y, year-on-year. So could you just help gain clarity on the two questions, please?

See, margin fund, I always guided with the 22%, 25% of EBITDA in a longer term. So this is the exceptional EBITDA what we have delivered in the last 3 years. [Foreign Language] The reason is that 7% to 8% is the different situations what we need to face and we need to put that for the growth front. So trade marketing funds, competition, you are saying that maybe sales promotion discount we need to pass into the channels. [Foreign Language] So that was always the plan to remain in the 20%, 22%, 25% of EBITDA. So that is the reason. [Foreign Language] So that is needed. And for the number for the state wise, I cannot give you on this call, but you can separately contact our IR for that.

Just because we have been writing to the IR team and them a lot, but the correspondence and communication has been very poor. So I think the IR should take a note that the communication to existing shareholders should be a little more proactive.

Sure. So we'll correct that way, and we'll pass this message to the team for that.

Yes. And last question, Utkarsh, as the first investor did mention in the call why not we have a reputed auditor because that will give a lot of confidence in large investors and also DIIs and FIIs. So we are lacking a decent reputed auditor and it has nothing to do with the company's existing strategy or the previous strategy. But now if we have a vision of scaling this company over the next 3 to 5 years, I would seriously recommend that at the Board level, you should discuss for having a reputed auditor.

Sure. Sure Vatsal. You are very right and we are onto that also. [Foreign Language] So we respect the advice and suggestions of yours. So [Foreign Language], but right now, if we talk about the current auditor, so it is R. Kabra and that is solo partner the ECOVIS firm that is from the Germany. So the ECOVIS is also very reputed firm into the Germany. So that is our auditor. But definitely, I understand what you are saying that in a Big 4 or Big 5 around. So we'll have that future plans for that.

Sir, we'll take the question from chat. This question is asked by Kevin Gala. Sir, since you said we are consolidating since last 2 years, and you know such period do come in our journey. Why are you still giving guidance of 20% growth since last 4 quarters?

You are very right that, but see, we want that growth actually [Foreign Language] But you are very right, 20% growth plan [Foreign Language], but anyhow because of so many circumstances, we were not able to deliver. [Foreign Language] So that this is the reason that though the quarter 3 is flattish and there is no much more to any announcement in this quarter, but though we are facing to you all, and we want to understand and your suggestions to grow more from here.

Sir, we have another question from Fortune Limited on chat. This question is if you want FY '26 revenue of around INR 320-odd crores, as you mentioned in last quarter, so are you estimating INR 100 crore revenue in quarter 4.

The exact number, I cannot say into this call. But quarter 4 is always a very good quarter to cover up the sales because if we go about the history, then every quarter 4 is always a very volumetric for us. So we are trying best [Foreign Language]. So we are trying our best for that.

And sir, there is one more question on chat by Siddhart Gupta. This question is, can you please repeat the volume growth of Q3? I joined late. So I missed. Also, what was the price hit we had in Q3.

Volume growth for Q3 is almost Y-o-Y is a flattish around, and 9 months is 4% around, 4% to 4.5% for the 9 months.

And we have one more question from Kishan Gupta on chat. What is the single most important thing you people are focusing currently?

Right now, we are focusing on the multifunction what we needed for the growth. Like I mentioned that talent acquisitions, induction training and brand communications, trade marketing. So all 360-degree efforts what we needed to grow from here.

And Kishan Gupta is following up. How was the growth in the white glue industry in October?

There is not a particular data we have for the October, but October is all over, very, very down into the demand, maybe the longer monsoon and the festival also. But we don't have the exit data for the October.

And there is one more question from Diya Jain on chat. Volume in tons and ASP for this quarter.

For this quarter means quarter 4.

Quarter 3.

We don't give the number of quarterly on this call. But if they have the questions, they can ask -- they can mail to the IR team.

Sir, we'll take the next question from Amit [indiscernible] .

[Foreign Language] Like the current capacity is 24,000, like what capacity utilization is current? [Foreign Language]. So what would be the peak revenue potential? [Foreign Language]

[Foreign Language] About the capacity right now, 2,000 tonnes per month [Foreign Language] capacity, average, we are doing 12-12, 50 tonnes per month. That is average. [Foreign Language] And after that, we are moving for the 3,500 tonnes per month, almost 70%, 80% come finish after 1 or 2 quarters end of this quarter, maybe we have realized the capacity of 3,500 tonne. [Foreign Language]

[Foreign Language]

[Foreign Language] So it is not the right number to explain that all over India market share. [Foreign Language]

We'll take the next question from [indiscernible]. Sir, we'll move on to Smith Gala.

[Foreign Language]

Sure. So exit data, I don't have available right now, but NSE process is on. So we'll communicate with our CS and compliance team, and we'll definitely get back to you regarding that.

Our qualitatively numbers [Foreign Language] qualitatively 40 days quarter 4 [Foreign Language]

[Foreign Language] Just said January, we are focusing on to -- more into the pool side. So we have done more carpenter meets into December and January. [Foreign Language] So market is now coming back to the rhythm [Foreign Language].

The next question from [indiscernible]

[Foreign Language] How far are you from getting the growth and brand presence like the other 5 states?

Sure. So I want to suggest Mr. Samit Shah, our CEO, to answer our discussion.

Am I audible?

Yes, you're audible, sir.

So basically, right now, we are in a buildup stage across all the new states, and we are going for the right talent onboarding and increasing our footprint, our penetration in the market in terms of acquiring new dealers, onboarding new fab across to drive demand on one hand on the other hand to have a placement across. So that's a process which is going on. And we are -- we have got a few new states, and we are also in the process of adding another 4 to 5 states, which are our lucrative states in terms of growth prospects for the coming quarters. So in the portfolio, we are adding those also so that our current volume, which is being driven majorly from Western Central gets divided amongst further growing states also. So that process is going on at this moment. So probably in a couple of quarter -- or 2 to 3 quarters, I think we'll be able to, I think, have finished the onboarding process and start our placements across the new territories. That's the plan.

My second question is about the line marketing expenses -- am I audible?

Yes.

Yes. So I want to ask is above the line marketing may be good for long-term brand presence and equity. [Foreign Language]

Right. So again, a good question, actually. So a very important question for our trade industry. So as you see that our major marketing spend is skewed towards trade marketing because that's our key trade people, right? So that will always be there. However, brand marketing, also, we are very conscious about, and we have started investing in that after the onboarding Pankaj Tripathi also as a brand ambassador. And we are selectively investing in the right revenues wherever TG is there, right? So rather than observation or spending money extravagantly on the brand marketing front, we have been very conscious on that investment and spending wherever TG is. Along with that, trade marketing will always remain our priority, one key priority. To engage in whatever new territories, we go to engage with those -- our trade people, be dealers or with carpenters to onboard them and to retain them for a longer period. It would be our focus area. So obviously, BTL will remain a key focus, along with ATL as well. However, we will again -- I reiterate the fact that our investment will be more skewed towards trade marketing.

We'll take the next question from Harish Shah. We'll move on to Amit again.

Over the years, can you tell us at least 3 to 4 special insights that you have in this business, which will enable you to succeed even against Pidilite.

So the main thing is that focus as a single product, single industry. This is the key success I believe. Second is always putting the customer and the employee to the core, that is always a strategy, good strategy. And the community, the end users are the key persons, who trust the brand and who recommend our brand. So to focus onto the carpenters, it is the best strategy to take this business next level.

I understand that as [indiscernible] because that applies to almost all the businesses in the world. But can you give me 3 or 4 steps that you take to really have a greater understanding of the customer and to engage with them well because you are now facing a competitor whose distribution strategy is and even the advertising and branding strategy is like iconic.

See, you are very right. And that's why they are there and we appreciate for that. We always benchmark and we learn from them. So -- but the main thing to addition of your thought is the distributions and the network to build is the main criteria into that. And as we work on to the community, [Foreign Language] for that, we need to do the transaction of our promises what we have made that we need to deliver regularly consistently. [Foreign Language] So that is the key what I want to share with you what your question is. So that I believe.

Basically, spending the time in the business and keeping on delivering itself is a strategy.

Right. Right.

And secondly, sir, many companies, [indiscernible] is an example, where the owners have taken sometimes on the distribution, at least they have left it more to professional management because finally, you do as owners get tired with so many other things. And yet the owner also sits and is almost on the first same terms with most distributors. So are we kind of thinking of that kind of strategy also because over many years, the owners may tire out with so many things. And once you have a more professional team in place for distribution, advertising and marketing like how Pidilite has done, it could yield more longer-lasting return.

So it is about the right strategy I think. It is not about the time waste, but I believe that it should be about the delegation of the work. And that should be handled. We already started for that 2 professionals and the strategy is to build for that.

So Amit, I think just to answer this, I think you rightly pointed out -- so we have realized this fact. And as you rightly mentioned that, as a leadership team, we would want to focus on the further growth prospects and all across and we will try to scheme as much as possible the market potential. Hence, we have already started onboarding the professionals from outside organizations from the various multinationals also in our company. And they also find it quite attractive company to enter into. And they have started -- so I will not name those people, but I think we have started onboarding on Northeast West South across wherever we are expanding new geographies and new territories. So completely, right, from 0 level, we are having professionals to drive the business further, right? So to ensure that we -- a management team can keep focusing on the core things and the business is being driven by the professionals because that's how you grow, right? So I think that's what we have already implemented.

So can you give any which kind of companies are we hiring these people.

As I mentioned, I can't tell the name of those companies at the moment as the process is going on, but there are multinationals. You can understand the multinationals where they come from and the kind of professional approach, the kind of SOPs and processes they follow, the kind of tech they operate on, the kind of sales techniques they follow. So all these new practices are bringing in and coming into Jyoti Resins also now and right from -- so as we really I mean, clearly mentioned in the beginning that we had the transformation phase at this moment. So we are on the hiring spree at the leadership level, at the ground level with the right talented guys on board to drive the business for that.

Sir, we'll take the question from Harish Shah.

Yes, yes. Am I audible? [Foreign Language]. Sir, I'm going through the balance sheet, though sales numbers are quite better comparing to 9 months ended '24 and '25. [Foreign Language] rather on promotional expenses, shall we spend on creating demand like distributing free samples. [Foreign Language]

You are very right, Harish, actually we are into that also. And we believe also with this thought process. [Foreign Language] So the reason is that only. We don't want to be only discounted brand, but we want to go with...

[Foreign Language] Sometime it happens.

That's a very valid question, Harish. Actually so in the same direction, we are working, I think you pointed out very correctly. The demand [indiscernible] is the one if there is a demand, there is a pool of the product, then I think we'll have to spend less on the creating awareness of the brand and I think will be...

Generating demand is more important because I'm being marketing person since last 40 years. [Foreign Language]

With market pull is there, you can save a lot of money on the trade push.

We'll take the next question from Aditi Loharuka.

Am I audible?

Yes. Yes, yes.

Sir, as you mentioned that out of 14 states in which we are present, 5 are mature markets. So for you, like what are the indicators of a mature market for the rest of the 9 states? Like is it state-specific or is it same for all like the parameters, which we have to achieve to consider a state to be a matured market?

Yes, Aditi, I think good question. So yes, we have benchmark, how do we name market is a mature market and how is this is a growth market for us. So any market where we have got a decent market share in the range of around 20% and above is we have termed as a mature market. Though the benchmark is 25%. So -- but once the market comes around 20% range, we start considering that it's a mature market. So these 5 states, which we are mentioning, we are around having 20% of market share. And in rest 9 states, we are in the process of acquiring market share and seeding work is going on complete 2.0 [indiscernible] process is going on in those states. And along with that, to answer, Aditi, we are also adding a few more lucrative states, as I mentioned earlier in my earlier other answer also. To have a higher penetration, larger economies of scale in whatever investment we do on a ATL front, it gets divided among various markets and we create awareness and market pool, as Harish also rightly mentioned earlier that it's like market pool always helps. So we are in that process also. So overall, on trade and brand perspective both places, we are investing very consciously to build a strong pool.

Sir, can you just tell your market share in the states of UP and [indiscernible] Delhi?

So it's I think you just -- UP, we have just opened a year back or so. So it's at the builder stage. The good number, you would want to say that I think we are present across more than 1,000 outlets in UP territory at this moment as we speak. And we started getting repeat orders from most of these outlets. So that's a very good positive sign that our brand is being accepted very well in those markets. And we are also building up our UP business in a robust manner going forward because it's one of the biggest states of the country and in this [indiscernible] also, so probably most of our trade comes from this region. So that's very focus -- I think key and focus market for us. So obviously, we are very conscious about it to build and gain more market share from there.

And sir, what about the performance in Delhi?

We consider -- I mean, so Delhi again, as I mentioned, [indiscernible] we started to get us simultaneously. So we are building it up. So Delhi-NCR and UP is under a buildup stage only at this moment as we speak, it's been just a year. So we are penetrating there across key outlets, key markets, hiring right talent across, expanding our dealer base, we are onboarding carpenters by having a lot of capital needs also and tertiary demand also from that. So it's in buildup stage. Probably it may take around another 3 to 4 quarters for us to have a decent presence in Delhi NCR.

We'll take the question from chat. This question is asked by Ayush Sharma. By when we are planning to achieve INR 500 crores in revenue? And what would be the product -- proportion of volume and price growth in the same?

So as I mentioned that we are now very much conscious about the numbers. So I think we will do the proper planning and then we can present the numbers. So that's why it is not right now the time that we can give the exact number of -- exact year of the INR 500 crores revenue. So we'll come back with a better planning for that.

And his another question is also when do we planning to -- planning on doing more CapEx? If yes, how much we justify the INR 500 crore revenue mark?

So right now, we are on to the brownfield expansions, and that is already 70%, 80% work is done. So within the next 1 or 2 quarters, it will be finished. And I think after '27, we can -- we will [Technical Difficulty] that will start for the new greenfield. And that will be around INR 40 crores to INR 45 crores of greenfield new expansion.

We'll take the last question from the chat, which is from Vishal Pandya. Question is how was VAM prices in the quarter gone by? And what are the prices now? And how does it affect our profitability?

It is definitely impact our profitability. But right now, it is flat around, so not pretty much rise into the VAM prices.

Since sir, there are no further questions. Would you like to give any closing comments?

So I request you all, and thank you very much for that and request you all to trust Euro team. We are trying our best to deliver the good numbers. And as we mentioned that we want to be very transparent to all the investors, and we'll do better planning and deliver the better numbers in near future. Thank you very much for trusting us.

Thank you, sir. Thank you to the management team for their valuable time, and thank you to all the participants for joining on the call. This brings us to the end of today's conference call. You all may disconnect now. Thank you.