Jubilant Agri & Consumer Products ltd. -Scaling Up for the Next Growth Cycle - Company Update

Jubilant Agri & Consumer products (JACPL) reported a strong Q4FY26 revenue performance, ahead of our estimates, driven by healthy traction across both performance polymers/chemicals and agri divisions. However, profitability remained below our estimates, impacted by gross margin pressure amid elevated raw material prices and continued weak margins in the agri business. While the performance polymers division remained resilient, margins were impacted by the volatile VAM price environment, with pricing actions being taken cautiously to avoid inventory mismatch in the channel. Demand remains healthy, particularly in adhesives, supported by steady home improvement and plywood-linked demand. Going ahead, partial commencement of the Gujarat plant in Q1FY27E, gradual ramp-up in adhesives capacity, stabilization in raw material prices and the proposed demerger of the agri business are expected to remain key monitorable. Given the current raw material volatility and slower margin recovery, we have revised our FY27E/FY28E earnings estimates downward by 7.9%/4.8%, respectively. Accordingly, we lower our target price to Rs 2,715 from Rs 2,855. However, we maintain our BUY rating, as the recent correction in the stock price, coupled with valuation rollover, provides an attractive risk-reward opportunity.

Revenue beats estimates:

JACPL reported 21.8% YoY revenue growth to Rs 4,852mn (MNCL Est Rs 4,599mn) in Q4FY26, ahead of our estimates. The Adhesives segment (~27% of sales) posted 13.5% YoY revenue growth. The segment continued to witness strong demand, supported by GST rate reductions and a recovery in discretionary spending, resulting in sustained double-digit growth. The Industrial Polymer segment (~36% of sales) reported 9.3% YoY revenue growth in Q4FY26, reflecting resilient performance despite a challenging global demand environment. The Agri business (~37% of sales) remained the key growth driver, reporting a strong 45.1% YoY revenue growth, aided by improved placement of SSP products across high-demand regions.

Margins Softened:

Gross margin for the quarter declined by 150 bps YoY to 41.4% (MNCL Est. 43.2%), primarily due to higher input costs across key raw materials. However, the impact was largely offset by a 70bps reduction in employee costs and a 70bps decline in other expenses, keeping operating margin flat YoY at 6.7% (MNCL Est. 7.7%). Consequently, EBITDA stood at Rs 325mn, registering a 19.8% YoY growth. PAT for the quarter came in at Rs 199mn (MNCL Est. Rs 220mn), up 24.5% YoY. The Adhesives segment reported an EBIT margin of 9.7%, expanding by 90 bps YoY, supported by the continued benefit of lower-cost inventory, which helped mitigate the impact of rising raw material prices. The Industrial Polymer segment recorded an EBIT margin of 15.2%, down 120 bps YoY, as higher raw material and packaging costs outweighed operational efficiencies. Meanwhile, the Agri division reported an EBIT loss of Rs 41mn, primarily due to a sharp increase in sulphur and acid prices arising from geopolitical disruptions, which significantly inflated input costs during the quarter.

Outlook:

We remain positive on JACPL's medium-term outlook, driven by its core Adhesives business, which continues to benefit from healthy demand across housing, renovation, plywood, and interior furnishing markets. Ongoing investments in brand building, product innovation, contractor engagement, and distribution expansion are expected to support market share gains and profitable volume growth. Existing adhesive plants are operating at ~80% utilization and are expected to reach ~90% by FY28, supporting revenue acceleration. Growth will be further aided by the commissioning of the Samlaya, Gujarat facility in FY27, which will add 30,000 MT of capacity, broadly split between adhesives and SBR latex, with utilization expected to ramp up to 40–50% over the next 12–18 months. While the Industrial Polymer & Chemicals business faces near-term headwinds from weak tyre and industrial markets, portfolio expansion, customer additions, and SBR latex launches should support gradual improvement. The proposed demerger of the Agri business is expected to sharpen the company's focus on its core Adhesives and Industrial Polymer businesses. Overall, JACPL's strong market position, capacity expansion, and improving business mix provide visibility for sustained earnings growth over the medium term.

Valuation & Key risks:

We expect JACPL to deliver a Revenue/EBITDA/PAT CAGR of 12.0%/16.9%/19.1% over FY26–28E, driven by strong growth in the Adhesives business, ramp-up of the Samlaya greenfield facility, and operating leverage benefits. However, given volatility in VAM prices and a slower-than-expected margin recovery, we have reduced our FY27E/FY28E EBITDA estimates by 7.5%/3.4%, resulting in earnings cuts of 7.9%/4.8%, respectively. The proposed agri demerger is expected to create a more focused Adhesives and Industrial Polymers business with an improved earnings profile. We maintain our BUY rating and value the stock on a SOTP basis, arriving at a revised target price of Rs 2,715 (earlier Rs 2,855). The recent correction in the stock price, coupled with valuation rollover, provides an attractive risk-reward opportunity. Key risks: raw material price volatility, butadiene supply disruptions, and weaker-than-expected construction activity.

Company website: https://www.jacpl.co.in/

*CMP is as per report published date

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Analyst:

• Rahul Dani - Research Analyst, Institutional Equities (NISM-201500034725)
• Aachal Pal- Research Associate, Institutional Equities (NISM-202300215737)

JACPL - Frequently Asked Questions (FAQ)

Here are quick answers to common investor questions on the JACPL investment opportunity, including levels, outlook and risk factors.

What drove Jubilant Agri's revenue growth in Q4FY26?

Revenue growth was driven by strong demand in adhesives, resilient industrial polymer performance, and robust growth in the agri segment supported by higher SSP product placements.

Why did margins remain under pressure during the quarter?

Margins were impacted by elevated raw material costs, including higher VAM, sulphur, and acid prices, although operational efficiencies helped offset part of the pressure.

How will the Gujarat plant support future growth?

The Samlaya, Gujarat facility will add 30,000 MT capacity across adhesives and SBR latex products, supporting volume growth, market share expansion, and operating leverage benefits.

What are the key growth catalysts for JACPL?

Key catalysts include adhesives market expansion, new product launches, capacity additions, distribution growth, improving utilization levels, and the proposed demerger of the agri business.

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