Euro Adhesives Charts Future Growth and Stable Margins

Ashwin Thakker

— 2 min read

Key Facts:

  • Sales Outlook: Targets INR 500 crore turnover within three years. Aims for 15-20% volume growth annually. Q1 FY26 volume saw a 3% decline due to early monsoons but anticipates recovery in remaining quarters.
  • Margin Outlook: Long-term EBITDA margin guidance of 22-25% sustained. For the current fiscal year (FY26), the company expects an EBITDA margin of 27-28%.
  • Capacity Expansion: Brownfield expansion by 1,500 tons/month (to 3,500 tons/month total) within 6-12 months, costing under INR 10 crore. Greenfield expansion of approximately INR 45 crore planned over the next two years.

Despite a modest 3% dip in Q1 FY26 volume due to early monsoons impacting the construction material sector, Jyoti Resins & Adhesives Ltd., operating under the Euro Adhesives brand, remains highly optimistic about its financial trajectory. The company's recent earnings call highlighted aggressive strategic initiatives, significant capacity enhancements, and a clear vision for market leadership, aiming for robust revenue growth and consistent profitability in the coming years. This proactive stance underlines Euro Adhesives' commitment to expanding its footprint and solidifying its position in the competitive synthetic wood adhesives market.

Strategic Growth and Market Expansion

Euro Adhesives is firmly focused on achieving an ambitious INR 500 crore turnover mark within the next three years, driven primarily by volume growth. The management aims for a 15% to 20% annual volume growth, acknowledging the Q1 FY26 volume drop of 3% as a temporary setback due to industry-wide softness caused by early monsoons. However, the company is confident in recovering this gap over the subsequent quarters, particularly after the Diwali season when market demand is expected to rebound.

A significant part of this growth strategy involves aggressive market penetration and brand building. The company has launched a substantial advertising, marketing, and branding campaign featuring noted celebrity Mr. Pankaj Tripathi, with advertisements airing across major TV channels and digital platforms. This marks a new phase of direct brand communication. Euro Adhesives has also expanded its presence to 14 states, with Delhi and Uttar Pradesh being the newest additions, and plans to increase penetration in both new and existing territories.

Sustaining Profitability and Operational Focus

Profitability remains a core focus for Euro Adhesives. The company reiterates its long-term guidance of maintaining a 22% to 25% EBITDA margin range. For the current fiscal year, management expects an even stronger performance, guiding for an optimistic 27% to 28% EBITDA margin across all four quarters. While Q1 saw higher marketing expenditures due to the initial launch of brand campaigns and extensive trade marketing efforts, these are anticipated to normalize in subsequent quarters, contributing to sustained margins.

To support its ambitious growth, the company is undertaking significant capacity expansion. A brownfield expansion, costing less than INR 10 crore, will increase the total production capacity from 2,000 tons to 3,500 tons per month within the next 6 to 12 months. This expansion is expected to nearly double the company's revenue potential, reaching INR 650 crore from the expanded capacity. Additionally, a greenfield expansion with an investment of approximately INR 45 crore is planned over the next two years. Management confirms that the focus remains on the domestic white glue market, which still offers a substantial addressable market of INR 7,500 crore, rather than diversifying into other adhesive categories. Raw material stability, particularly for Vinyl Acetate Monomer (VAM), is managed through three-month contracts, with prices remaining largely stable at INR 65-75 per kg since FY23.

Euro Adhesives is poised for a robust future, leveraging strategic investments in capacity and brand building to drive substantial volume and revenue growth. Despite short-term market fluctuations, the company's clear focus on expanding its domestic footprint in the white glue segment, coupled with disciplined financial management and a commitment to strong EBITDA margins, positions it for sustained success. Investors can anticipate continued efforts on the ground level to deliver strong and steady growth in the coming quarters.

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