Stock of this specialty chemicals company zoomed over 100% in five weeks

Shares of Jyoti Resins & Adhesives locked in 5 per cent upper circuit for the fifth straight day as they hit a new high of Rs 1,769.70 on the BSE.

Shares of Jyoti Resins & Adhesives locked at 5 per cent upper circuit as they hit new high of Rs 1,769.70 in Wednesday’s intra-day trade, in an otherwise weak market. The stock of this specialty chemicals company locked upper circuit for the fifth straight day as it surged 27 per cent, during the period. In comparison, the S&P BSE Sensex was down 0.18 per cent at 60,463 levels at 12:43 pm.

On September 8, 2022, the stock of Jyoti Resins & Adhesives turned ex-date for bonus shares in the ratio of 2:1 i.e. 2 bonus shares for every 1 share held in the company.

In the past five weeks, the stock price of the company more-than-doubled or zoomed 106 per cent from Rs 858 (adjusted to bonus issue) per share. The stock has skyrocketed 527 per cent in a year, as compared to 3.8 per cent rise in the S&P BSE Sensex.

Currently, Jyoti Resins & Adhesives is traded under ‘XT’ group. XT comprises of all stocks listed only on the BSE and settled on a trade-to-trade basis. These companies have low-to-moderate market capitalization, lower contribution to overall trading turnover and requires relatively higher attention.

In the April-June quarter of this fiscal year (Q1FY23), Jyoti Resins & Adhesives reported strong growth on all fronts. Revenue, EBITDA, PAT (profit after tax) were up 137 per cent, 174 per cent, and 151 per cent, respectively, on a year-on-year (YoY) basis.

Jyoti Resins & Adhesives manufactures various types of wood adhesives with different formulations like waterproof, anti-termite fast drying, weather proof, anti-fungle adhesives under the brand name of 'EURO 7000'. The company’s headquarters are based in Ahmedabad and Mumbai. The company’s sales footprint extends largely across Gujarat, Madhya Pradesh, Rajasthan, Maharashtra, Karntaka and Telangana.

As the company imports raw materials from several countries, they are then processed at their plant in Sutlej, in order to manufacture white glue. Later, the finished product is packaged into different sizes starting from 500 gram up to 70 kilograms. Post the manufacturing process, the products are then sold through a mix of distributors and consignee & sales agents into the retail market (sold to dealers).
 

Owing to the sharp demand and growth in market share, the company increased its production capacity to 2,000 total productive maintainence (TPM). With this, the company will set up a warehouse to enhance storage of raw materials and finished goods.

Over the last 7 years, the company grew at 38 per cent CAGR, 73 per cent revenue, and combined 115 per cent EBITDA and PAT.

Against this backdrop, the management remains optimistic of the Indian economy and targets 25 per cent CAGR for revenues over the next 3-4 years.