Jyothy Labs Ltd. Q4 Research Report

Overview

Jyothy Labs Ltd. (JLL) is an Indian FMCG player with a diverse product portfolio across fabric care, dishwashing, mosquito repellents, and personal care. The company's revenue grew by approximately 5% YoY, driven by a 7% YoY increase in volumes. However, EBITDA and PAT declined by 4% and 7% respectively due to softness in margins.

Segmental Performance

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• Fabric Care revenue grew by 9% YoY, led by strong liquid detergents.
• Dishwash revenue declined by 1.3% YoY despite a 7% YoY increase in volumes due to high competitive intensity.
• Personal Care and Household Insecticides (HI) grew by 11% and 13% YoY respectively.

Key Metrics

• Gross margin declined by 330bps YoY to 46.5% due to price cuts and higher grammage in key categories.
• EBITDA margins dropped by 140bps YoY to 15%.
• Ad-spend for the quarter was approximately 7.7% of sales, with a guided range of 8-9% for a broader time horizon.

Financial Position

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• The company maintains a strong cash position of approximately Rs. 800 crore and remains debt-free, supporting future growth and potential acquisitions.

Valuation and Recommendation

• The stock currently trades at a 1yr fwd PE of 24x (30x 5yr avg).
• We value JLL at a P/E of 22x (3yr avg=34x), with a target price of Rs. 271.
• We recommend a BUY rating, supported by an improving demand outlook and a decent correction in valuation.