Accumulate Jyothy Labs Limited for target Rs. 247 - Geojit Financial Services
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Margins are improving on declining input costs
Jyothy Labs Ltd (JLL) is an Indian FMCG player with products across fabric care, dishwashing, mosquito repellents & personal care.
• We maintain our Accumulate rating with a revised target price of Rs. 247 (from Rs.224), factoring in healthy topline growth & improving margins.
• Revenue grew by 14%YoY, largely aided by price growth (~11%YoY), while volume growth was ~2%YoY.
• Fabric care continued its strong growth (26%YoY), dishwash and personal care segments grew by 10% and 12% YoY, respectively while Household Insecticide (HI) de-grew by 16%YoY due to seasonal issues.
• Most of the input prices have softened, which along with the earlier price hikes, aided margin improvement. The margins will further improve if the input prices correction continues.
• Operating profit grew by 38%YoY as EBITDA margin improved by 250bps YoY to 13.8%, while Net profit grew by 77%YoY due to higher other income and lower depreciation.
• We expect margins to improve further in FY24, revenue/earnings to grow at ~10%/29% CAGR over FY22-24E, respectively, and value JLL at 26x FY25 P/E.
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