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Revenue growth in double digit: Jyothy Labs posted Q2FY24 revenue at Rs 732cr, up by 11% YoY and 6.6% QoQ driven by volumes growth of 9% YoY. The topline performance was strongly led by growth across segments like fabric care, dishwashing & personal care except for household insecticides whose numbers were mixed.

Robust margin growth: Gross profit grew by 35%/9.6% YoY/QoQ to Rs 360cr with margin improvement of 870bps YoY/135bps QoQ to 49.2% led by decrease in raw material prices and strong volume growth. Despite high spends on advertisements (~7.8% in Q2FY24), growth of 38% YoY/13.8% QoQ, the company’s EBITDA grew by 68.3%/15.3% YoY/QoQ to Rs 135.4cr with margin at 18.5%, an improvement of 628bps/140bps YoY/QoQ. PAT grew by 59.1% YoY/8% QoQ to Rs 104cr with an increase in margin of 428bps/19bps YoY/QoQ to 14.2%.

Steady growth amongst segments: Its Fabric Care segment (~43% of revenue) grew by 10.6%/6.7% YoY/QoQ to Rs 316.6cr and posted the profit (~61% of profit) of Rs 82.8cr, higher by 91% YoY and 26.1% QoQ led by launch of new SKU’s, strong emphasis on distribution channels and sampling initiatives. Further, dishwashing (~34.2% of revenue) grew by 10%/8.3% YoY/QoQ and profit grew by 48.6%/13% YoY/ QoQ to Rs 52.3cr with share in profit at 38.7% in Q2FY24 driven by addition of new customers in its brands Exo & Pril, focusing on large packs and investing towards enhancing brand equity. Also, Personal Care segment (12.2% of revenue) witnessed strong growth of 22.3%/6.6% YoY/QoQ to Rs 89.6cr led by emphasis on neem portfolio however the profit share saw dipped to 7.3%.

Key highlights: 1) Gained market share across portfolios. 2) Strengthen distribution reach by touching 1.1mn outlets. 3) In fabric care, the focus is on premium as well as value products in liquid detergents. 4) Dishwashing the focus is on the liquid category, adding new customers as well as investing in advertisements & outdoor media for its Exo brands. 5) Personal care focus is on extending into a larger portfolio under the brand Margo. 6) Added Kareena Kapoor as new brand ambassador for Maxo Genius campaign. 7) For household insecticides the company will be focusing on innovation, distribution and consumer engagement activities. 8) Management remains positive on the future growth prospects and wants to drive strong double digit volume led growth and maintain an EBITDA margin between 16-17%.

Outlook & Valuation: Jyothy Labs reported decent Q2FY24 results led by growth across most of its segments, strong volume growth and healthy spends on advertisements. Further, the management plan is to drive volume led growth, invest behind its core brands by innovating more products and adding categories as well as continue to strengthen distribution reach. On the financials, revenue/EBITDA is estimated to grow at 15%/42.5% CAGR over FY23-25E as we are optimistic on the growth prospect of Jyothy Labs and revise rating to Accumulate with target price to Rs 466.

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