IGI Logo

Healthy performance continues…

Jyothy Labs Ltd. (JLL) is an Indian FMCG player with products across fabric care, dishwashing, mosquito repellents & personal care.

* We revise our target price to Rs.645 (from Rs. 478), maintaining our Accumulate rating considering the good performance in the quarter.

* For Q1FY25, revenue grew by 8%YoY, mainly driven by volume. Main segments, fabric care and dishwash (77% of total sales), grew by ~9% and ~7% YoY, respectively. Personal care and household insecticides grew by ~11% and 2% YoY, respectively.

* Operating profit grew by ~14%YoY, mainly aided by 340bps YoY improvement in gross margin to 51.3%. Ad spends have increased by 22% YoY for the quarter. Despite this, EBITDA margin improved by 90bps YoY to 18%.

* The company is not considering price increases, and instead, is focussing on volume growth, with a margin guidance of 16%-17%.

* Rural demand is witnessing a gradual uptick. Good monsoon along with GoI’s initiatives to improve demand augurs well for the company. We expect revenue/earnings to grow at ~11%/15% CAGR over FY24-26E. We value JLL at 45x Sept 2026 EPS.

Healthy topline growth aided by volumes

Revenue has grown by 8% YoY for Q1FY25, mainly aided by a volume growth of ~11%. The gap in value and volume growth is primarily due to increase in grammages and select SKU price cuts. The main segments, fabric care and dishwash (77% of total sales), grew by ~9% and ~7% YoY, respectively. Personal care and household insecticides grew by ~11% and 2% YoY, respectively. JLL has a strong focus on new launches and there has been good traction in the liquid detergent segment. Overall, there's been a healthy, consistent operational performance with rise in market share for each of the brands. The company has been leveraging on modern trade and ecommerce channels with the revenue share increasing from 10% to 15% in 3 years. The company will continue to focus on volume led growth to achieve a higher scale of business operation through brand building initiatives and expansion in distribution.

Healthy margin improvement despite higher ad spends

Gross margin for Q1FY25 has improved by 340 bps YoY to 51.3% due to lower input costs. EBITDA margin has improved by 90bps YoY to 18%, despite an increase in adspends of 22% YoY. EBITDA and PAT growth were at 14% and 17% YoY, respectively. JLL has guided for an EBITDA margin of at least 16%-17% on an annual basis. The price of palm oil, a key raw material of the personal care segment, has declined (although it is volatile). However, freight costs have gone up. The losses in the household insecticides segment will keep coming down as the product mix improves. The company is not considering price increases, and instead, is focusing on volume growth, with decent margins (guided for 16%-17%).

Valuation & Outlook 

Rural demand is witnessing a gradual uptick. Good monsoon along with GoI’s initiatives in the Union Budget to improve demand augurs well for the company. Focus on expanding distribution, increasing brand investments and exploring new product launches will support JLL’s volume growth. The company has a strong balance sheet and cashflow generation. We value JLL at 45x on Sept. 2026 EPS to arrive at a revised target price of Rs.645 (from Rs. 478), maintain Accumulate rating considering healthy topline growth and strong margins.

For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer 

SEBI Registration Number: INH200000345