The company's Q2 FY26 performance reflects a tale of two narratives: whilst year-on-year comparisons show healthy growth in both revenue and profitability, sequential momentum has stalled. Net sales stood at ₹74.38 crores, down 0.96% from Q1 FY26's ₹75.10 crores, though up 13.99% from ₹65.25 crores in the year-ago quarter. The operating profit margin (excluding other income) compressed to 27.53% from 27.48% in the previous quarter, marking a sequential decline but remaining well above the 29.75% reported in Q2 FY25.
The stock's technical indicators paint a concerning picture, with all major moving averages trending below current price levels and the overall trend classified as bearish since October 6, 2025. Trading 32.91% below its 52-week high, the stock has underperformed both the Sensex and its speciality chemicals sector peers by significant margins over multiple timeframes.
Financial Performance: Margin Resilience Amidst Revenue Headwinds
| Quarter | Revenue (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | PAT Margin |
|---|---|---|---|---|---|
| Sep'25 (Q2) | 74.38 | -0.96% | 17.16 | -1.27% | 23.07% |
| Jun'25 (Q1) | 75.10 | -4.47% | 17.38 | -12.14% | 23.14% |
| Mar'25 (Q4) | 78.61 | +10.58% | 19.78 | +3.78% | 25.16% |
| Dec'24 (Q3) | 71.09 | +8.95% | 19.06 | +17.00% | 26.81% |
| Sep'24 (Q2) | 65.25 | -5.68% | 16.29 | -13.16% | 24.97% |
| Jun'24 (Q1) | 69.18 | -2.89% | 18.76 | -0.05% | 27.12% |
| Mar'24 (Q4) | 71.24 | — | 18.77 | — | 26.35% |
Jyoti Resins demonstrated commendable margin discipline during Q2 FY26, maintaining a PAT margin of 23.07% despite modest revenue contraction. The company's operating profit (PBDIT excluding other income) stood at ₹20.48 crores, representing a 27.53% margin on sales. Whilst this marks a sequential decline from the 30.73% margin achieved in March 2025, it reflects the normalisation of margin expansion witnessed during the March quarter peak.
Employee costs rose to ₹8.61 crores in Q2 FY26 from ₹8.52 crores in the previous quarter, indicating controlled personnel expense management. The company's tax rate remained stable at 25.78%, slightly higher than the previous quarter's 25.22% but consistent with the historical average of 25.41%. Depreciation charges increased marginally to ₹0.48 crores from ₹0.46 crores, reflecting steady capital expenditure patterns.
Other income contributed ₹3.12 crores in Q2 FY26, up from ₹3.06 crores in Q1 FY26, providing a modest cushion to overall profitability. The company's gross profit margin stood at 31.73%, demonstrating resilience in pricing power despite competitive pressures in the speciality chemicals sector. The quality of earnings remains robust, with the company maintaining minimal debt levels and generating consistent cash flows from operations.
Exceptional Capital Efficiency: ROE Leadership in Speciality Chemicals
Jyoti Resins' standout feature lies in its exceptional return on equity, averaging 35.79% over the long term and reaching 29.00% in the latest period. This performance significantly outpaces most peers in the speciality chemicals sector, underscoring superior capital allocation and operational efficiency. The company's average ROCE of 98.97%, peaking at 107.97% in the latest calculation, positions it amongst the most capital-efficient manufacturers in the industry.
Zero-Debt Balance Sheet: A Fortress of Financial Strength
Jyoti Resins operates with negligible debt, reflected in a negative net debt-to-equity ratio of -0.69, effectively making it a net cash company. With an EBIT-to-interest coverage ratio averaging 59.57 times, the company faces virtually no financial risk from leverage. This pristine balance sheet provides significant strategic flexibility for growth investments, acquisitions, or shareholder returns without the burden of interest servicing.
The company's sales-to-capital-employed ratio of 2.09 times indicates efficient asset utilisation, generating over two rupees of revenue for every rupee of capital deployed. The absence of promoter pledging (0.0% pledged shares) and a conservative dividend payout ratio of 14.62% reflect management's confidence in retaining capital for organic growth opportunities whilst maintaining shareholder-friendly policies.
However, the company's quality assessment reveals a recent downgrade. The overall quality grade stands at "Average" as of November 2025, with the assessment noting that "Company's Valuation parameters have become very low compared to its past." This suggests that whilst fundamental quality metrics remain strong, market perception and valuation multiples have contracted significantly.
Negative Financial Trend: Warning Signals in Recent Quarterly Performance
The company's short-term financial trend turned "Negative" in December 2025, marking a concerning shift from previous positive momentum. Several key metrics have deteriorated to multi-quarter lows, raising questions about near-term operational challenges. The quarterly PAT of ₹15.37 crores (likely referring to Q3 FY26 or a trailing calculation) fell 16.20% compared to the previous four-quarter average, whilst PBDIT at ₹18.87 crores marked the lowest level in recent quarters.
Key Negative Factors Driving Trend Deterioration
Critical concerns identified: Operating profit to net sales ratio dropped to its lowest point at 26.10%, PBT (less other income) fell to ₹18.39 crores at the bottom of the recent range, and earnings per share declined to ₹12.81, the weakest quarterly performance in the current fiscal year. These metrics collectively signal margin pressure and profitability challenges that require management attention and operational course correction.
The trend history shows a progression from "Outstanding" in September 2022 to "Very Positive" and then "Positive" before settling into the current "Flat" and subsequently "Negative" territory. This gradual deterioration suggests structural challenges rather than temporary headwinds, potentially related to raw material cost inflation, competitive intensity, or demand moderation in key end-user segments.
Speciality Chemicals Sector: Navigating Cyclical Headwinds
The speciality chemicals industry has faced significant headwinds over the past year, with inventory corrections, demand slowdown in key export markets, and margin pressures from elevated raw material costs. Jyoti Resins, focused on synthetic wood adhesives, serves the furniture, plywood, and construction sectors—segments that are sensitive to real estate cycles and consumer durables demand.
The company's revenue growth of 13.99% year-on-year in Q2 FY26 compares favourably against the sector's challenges, suggesting some resilience in its product portfolio and customer relationships. However, the sequential revenue decline of 0.96% indicates that the company is not immune to broader industry pressures. The adhesives segment typically benefits from stable demand due to essential applications, but pricing power can be constrained during periods of weak end-user demand.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Jyoti Resins | 17.22 | 5.00 | 35.79 | -0.69 | 0.85 |
| Bhansali Engg. | 12.94 | 2.08 | 26.35 | -0.10 | 3.46 |
| Indokem | 372.28 | 31.38 | 4.48 | 0.32 | — |
| Yasho Industries | 132.82 | 3.95 | 16.65 | 1.33 | 0.04 |
| Vidhi Specialty | 32.66 | 5.02 | 17.96 | 0.08 | 1.45 |
| Platinum Industr | 30.73 | 3.21 | 12.45 | -0.32 | — |
Jyoti Resins trades at a P/E ratio of 17.22 times, significantly below the peer average of approximately 116 times (excluding outliers like Indokem at 372 times). The company's price-to-book ratio of 5.00 times appears reasonable given its superior ROE of 35.79%, which substantially exceeds the peer average of around 16%. This valuation discount despite higher profitability metrics suggests either market scepticism about sustainability of returns or concerns about growth trajectory.
The company's dividend yield of 0.85% lags behind peers like Bhansali Engineering (3.46%) and Vidhi Specialty (1.45%), reflecting a lower payout ratio as management retains capital for reinvestment. With a market capitalisation of ₹1,262 crores, Jyoti Resins ranks sixth amongst its peer group, positioning it as a mid-sized player in the speciality chemicals space.
Valuation Analysis: Premium Justified or Value Trap?
At a P/E ratio of 17.22 times trailing twelve-month earnings, Jyoti Resins trades at a substantial discount to the broader speciality chemicals industry P/E of 39 times. This 55.85% discount to sector multiples appears attractive on the surface, particularly given the company's superior profitability metrics. The price-to-book ratio of 5.00 times, whilst elevated in absolute terms, appears justified when contextualised against the company's ROE of 35.79%—a premium return profile that warrants a valuation premium.
However, the proprietary valuation assessment categorises the stock as "VERY EXPENSIVE," suggesting that despite the discount to industry multiples, the stock's absolute valuation remains stretched relative to its historical norms and growth prospects. The PEG ratio of 3.88 indicates that investors are paying ₹3.88 for every unit of earnings growth, well above the ideal threshold of 1.0 to 1.5 for reasonably valued growth stocks.
Valuation Dashboard
P/E Ratio (TTM): 17.22x (55.85% discount to industry)
Price to Book Value: 5.00x
EV/EBITDA: 12.43x
EV/Sales: 3.65x
Dividend Yield: 0.85%
Mojo Score: 21/100 (STRONG SELL territory)
The stock's 52-week price range of ₹1,010.60 to ₹1,570.00 illustrates significant volatility, with the current price of ₹1,053.30 trading just 4.23% above the 52-week low and 32.91% below the high. This proximity to multi-month lows suggests that the market has already priced in significant concerns about near-term growth prospects and profitability sustainability.
Enterprise value metrics provide additional context: EV/EBITDA of 12.43 times and EV/Sales of 3.65 times position the company at reasonable multiples for a profitable, low-debt speciality chemicals manufacturer. However, the combination of negative financial trends, bearish technical indicators, and deteriorating quarterly metrics raises questions about whether these multiples adequately reflect the risks ahead.
Shareholding Pattern: Promoter Increase Signals Confidence
| Quarter | Promoter % | Change | FII % | MF % | DII % | Non-Inst % |
|---|---|---|---|---|---|---|
| Dec'25 | 53.89 | — | 0.04 | 0.00 | 1.04 | 45.04 |
| Sep'25 | 53.89 | +3.06 | 0.04 | 0.00 | 0.95 | 45.13 |
| Jun'25 | 50.83 | — | 0.08 | 0.00 | 1.22 | 47.87 |
| Mar'25 | 50.83 | — | 0.09 | 0.00 | 0.77 | 48.30 |
| Dec'24 | 50.83 | — | 0.12 | 0.00 | 0.54 | 48.51 |
A notable development in the shareholding pattern occurred during the September 2025 quarter, when promoter holding increased by 3.06 percentage points to 53.89% from 50.83% in the previous quarter. This represents a significant vote of confidence from the promoter group, led by Jagdish Nathalal Patel (22.12%), Jyotika Jagdish Patel (10.81%), Priyanka Utkarshkumar Patel (10.56%), and Utkarshkumar Jagdishbhai Patel (10.05%). The promoter stake has remained stable at 53.89% in the subsequent December 2025 quarter.
Foreign institutional investor (FII) presence remains minimal at 0.04%, having declined from 0.12% in December 2024. The absence of mutual fund holdings (0.00% across all quarters) and negligible insurance company participation highlights the stock's limited institutional appeal. Other domestic institutional investors (DII) hold 1.04%, up from 0.95% in September 2025, indicating marginal buying interest from this category.
The non-institutional shareholding stands at 45.04% as of December 2025, down from 48.51% a year earlier, suggesting some retail investor exit during the stock's decline. The complete absence of promoter pledging (0.0%) across all periods reinforces the financial strength and confidence of the promoter group, eliminating any concerns about forced selling or financial distress.
Stock Performance: Severe Underperformance Across All Timeframes
| Period | Stock Return | Sensex Return | Alpha | Sector Return |
|---|---|---|---|---|
| 1 Week | 0.94% | 2.94% | -2.00% | — |
| 1 Month | -6.36% | 0.59% | -6.95% | — |
| 3 Month | -13.65% | 1.02% | -14.67% | — |
| 6 Month | -21.62% | 5.27% | -26.89% | — |
| YTD | -5.41% | -1.36% | -4.05% | — |
| 1 Year | -22.30% | 7.97% | -30.27% | 9.72% |
| 3 Years | -10.61% | 38.25% | -48.86% | — |
| 5 Years | 708.36% | 63.78% | +644.58% | — |
Jyoti Resins has delivered severely disappointing returns across all recent timeframes, underperforming both the Sensex and its speciality chemicals sector peers by wide margins. The stock has declined 22.30% over the past year, compared to the Sensex's gain of 7.97%, resulting in negative alpha of 30.27 percentage points. Against the speciality chemicals sector return of 9.72%, the stock has underperformed by 32.02 percentage points, ranking amongst the weakest performers in its peer group.
The three-month return of -13.65% and six-month return of -21.62% illustrate accelerating downward momentum, with the stock consistently trading below all major moving averages. The bearish technical trend that commenced on October 6, 2025, at ₹1,230 has resulted in a decline of approximately 14.37% to current levels. All technical indicators—MACD, Bollinger Bands, KST, and Dow Theory—signal bearish or mildly bearish conditions across weekly and monthly timeframes.
However, the long-term picture presents a starkly different narrative. Over five years, the stock has delivered phenomenal returns of 708.36%, vastly outperforming the Sensex's 63.78% gain with positive alpha of 644.58 percentage points. The ten-year return of 4,195.85% represents a wealth-creation story that has rewarded patient long-term investors handsomely, despite the recent sharp correction.
Investment Thesis: Quality Company, Challenging Entry Point
The investment case for Jyoti Resins presents a complex picture of fundamental quality overshadowed by near-term challenges and unfavourable technical momentum. The company's core strengths—exceptional ROE, zero-debt balance sheet, and consistent profitability—remain intact, but deteriorating quarterly trends, negative financial momentum, and bearish market sentiment create significant headwinds for potential investors.
The proprietary Mojo Score of 21 out of 100 places the stock firmly in "STRONG SELL" territory, reflecting the convergence of multiple negative factors: expensive valuation (despite sector discount), deteriorating financial trends, bearish technical indicators, and consistent underperformance against benchmarks. The score has declined from 51 (HOLD) in July 2025 to the current level, indicating progressive deterioration in the investment case.
Key concerns limiting the score include the elevated PEG ratio of 3.88, bearish technical trend across all timeframes, negative financial momentum with several metrics at multi-quarter lows, and persistent underperformance against both the Sensex and sector peers over the past three years. The combination of these factors suggests that the stock's valuation has not yet adequately adjusted to reflect the changed growth and profitability outlook.
Key Strengths & Risk Factors
KEY STRENGTHS ✓
- Exceptional Capital Efficiency: ROE of 35.79% and ROCE of 98.97% rank amongst industry leaders, demonstrating superior profitability and capital allocation
- Zero-Debt Balance Sheet: Net cash position with debt-to-equity of -0.69 provides financial flexibility and eliminates refinancing risks
- Consistent Profitability: PAT margins above 23% demonstrate pricing power and operational efficiency in a competitive industry
- Promoter Confidence: Recent 3.06% stake increase to 53.89% with zero pledging signals strong insider conviction
- Strong Interest Coverage: EBIT-to-interest ratio of 59.57x eliminates financial distress concerns
- Long-Term Wealth Creation: Five-year return of 708.36% and ten-year return of 4,195.85% demonstrate value creation capability
- Valuation Discount to Sector: P/E of 17.22x trades at 55.85% discount to industry average of 39x
KEY CONCERNS ⚠
- Negative Financial Trend: Q3 FY26 metrics at multi-quarter lows with PAT down 16.20% vs four-quarter average
- Revenue Stagnation: Sequential decline of 0.96% in Q2 FY26 signals demand challenges or competitive pressures
- Margin Compression: Operating margin fell to 26.10%, the lowest in recent quarters, raising profitability sustainability concerns
- Severe Stock Underperformance: -22.30% return over one year vs Sensex +7.97% and sector +9.72%
- Bearish Technical Indicators: All moving averages, MACD, and trend indicators signal continued downward pressure
- Minimal Institutional Support: FII holding of 0.04%, zero MF presence, and low DII holding of 1.04% indicate lack of institutional conviction
- Expensive Valuation Assessment: "VERY EXPENSIVE" grade with PEG ratio of 3.88 suggests limited upside potential
Outlook: What to Watch
POSITIVE CATALYSTS 📈
- Sequential revenue growth returning to positive territory in upcoming quarters
- Operating margin expansion back above 30% threshold
- Further promoter stake increases or share buyback announcements
- Technical trend reversal with sustained move above ₹1,175 (100-DMA)
- Institutional investor entry (MF or FII accumulation)
RED FLAGS 🚩
- Further quarterly profit declines or margin compression below 25%
- Revenue growth turning negative on year-on-year basis
- Break below ₹1,010 (52-week low) triggering additional technical selling
- Promoter stake reduction or any pledging of shares
- Management guidance downgrade or commentary on demand weakness
The near-term outlook for Jyoti Resins hinges on management's ability to reverse the negative financial trend and restore sequential growth momentum. With the stock trading near 52-week lows and technical indicators deeply bearish, any recovery will require not just stabilisation of quarterly metrics but demonstrable improvement in revenue growth and margin expansion. The upcoming Q3 FY26 results will be critical in determining whether the recent weakness represents a temporary blip or the beginning of a more prolonged earnings downturn.
For the stock to regain investor confidence, the company needs to demonstrate that its exceptional ROE and capital efficiency metrics are sustainable despite the challenging operating environment. A return to sequential revenue growth, operating margins above 30%, and earnings momentum would be necessary conditions for a re-rating. Until such evidence emerges, the combination of negative financial trends, bearish technicals, and expensive valuation creates a challenging risk-reward proposition.
The Verdict: Quality Franchise, Wrong Entry Point
Score: 21/100
For Fresh Investors: Avoid initiation at current levels. Despite the company's strong fundamental quality metrics including exceptional ROE and zero-debt balance sheet, the convergence of negative financial trends, bearish technical momentum, expensive valuation assessment, and severe underperformance creates an unfavourable risk-reward profile. Wait for clear evidence of quarterly trend reversal and technical stabilisation before considering entry.
For Existing Holders: Consider reducing exposure or exiting positions. The deterioration from HOLD (score 51) in July 2025 to STRONG SELL (score 21) currently reflects meaningful degradation in the investment case. Whilst long-term holders who entered at significantly lower levels may choose to hold through the cycle given the company's quality attributes, recent buyers facing losses should reassess their conviction given the negative momentum across multiple parameters.
Fair Value Estimate: ₹950-1,000 (10% downside risk from current ₹1,053)
The stock's proximity to 52-week lows at ₹1,010 provides limited downside cushion, but the absence of positive catalysts and continued technical weakness suggest further time correction or modest price decline may be necessary before a sustainable bottom forms. A decisive move above ₹1,175 (100-DMA) accompanied by improving quarterly metrics would be the first sign of trend reversal worth monitoring.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. The views expressed are based on data available as of February 09, 2026, and are subject to change based on market conditions and company developments.
