J.G.Chemicals (JGCHEM)
CyclicalFairStock Score: 45/100 — MIXED
Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1
Key Financials
| Current Price | ₹606.15 |
| Market Cap | ₹2,375.26 Cr |
| P/E Ratio | 31.65 |
| ROCE | 20% |
| ROE | 6.74% |
| Dividend Yield | 0.2% |
| Profit Growth | 58.8% |
| Debt/Equity | 0.01 |
| Sales Growth | 44.8% |
| Promoter Holding | 70.99% |
| 52-Week Range | ₹298.4 — ₹664.8 |
| Sector | Chemicals & Petrochemicals |
| Book Value | ₹133.76 |
Strengths
- Near-zero leverage (D/E 0.01) provides financial flexibility in a cyclical downturn.
- ROCE of 20% demonstrates efficient capital deployment despite commodity pressures.
- Promoter holding of 70.99% strongly aligns management with minority shareholders.
- Piotroski F-score of 7/9 indicates solid operational and financial health.
- Sales growth of 18.84% shows robust demand for its products.
Concerns
- Profit growth of only 3.12% versus 18.84% sales growth signals margin compression.
- Valuation is rich: P/E 22.5, P/B 5.25, PEG 2.05 leave no margin of safety.
- Dividend yield of 0.28% offers negligible income support.
- ROE of 6.74% (as quoted) is weak, and commodity chemicals lack pricing power.
AI Analysis
I am reminded of Graham's admonition: price is what you pay, value is what you get. At ₹406.55, J.G.Chemicals has a market cap of ₹1,418 Cr, a P/E of 22.5, and a P/B of 5.25 versus book value of ₹77.51. The company has an enviable balance sheet—debt-to-equity of 0.01—and a ROCE of 20%, suggesting management has found a reasonably efficient way to deploy capital in a commodity chemicals business. Yet the last quarter illustrates the cyclical trap: sales of ₹248 Cr generated only ₹18 Cr in net profit, a thin 7.3% margin. While full-year sales grew 18.84%, profit growth is merely 3.12%; this is the classic commodity problem—revenue inflates with prices, but costs and competition erode the bottom line. The Piotroski score of 7/9 gives me comfort on operational soundness, and promoter holding of 70.99% does align ownership with minority shareholders. However, as a value investor, I ask: what am I getting for the price? The PEG ratio of 2.05 tells me growth is too expensive. The dividend yield of 0.28% means I'm not being patient with income. ROE quoted at 6.74% is hardly inspiring, and the stock has already collapsed from ₹646.95 to ₹406.55—yet still trades at 22 times earnings. Benjamin Graham would call this speculation disguised as investment. There is no margin of safety. I will keep it on my watchlist, not in my portfolio.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer