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Mixed revenue performance: Jyothy Labs posted mixed performance as Q4FY24 revenue saw an improvement of 7% YoY and volume growth of 7% YoY. But, the sequential growth was muted as it de-grew by 2.6% to Rs 660cr. Amongst segments, fabric care, dishwashing and personal care drove the growth as compared last year while sequentially home insecticides witnessed growth while subdued growth across all other segments impacted topline.

Margin improved YoY but subdued QoQ: Its Q4FY24 gross profit increased by 15.8% YoY but declined by 3.1% QoQ to Rs 326.7cr and margin came in 49.5%, which increase by 378bps YoY but declined by 26bps QoQ. Further, its EBITDA too saw a mixed performance as it grew by 18.8% YoY to Rs 108.4cr with improvement in margin by 163bps YoY to 16.4% but sequentially it declined by 8.6% with margin down by 109bps. Also, PAT followed the same trend as it posted profit of Rs 78.2cr, growth of 31.9% YoY and improvement in margin of 224bps YoY while it declined by 14% QoQ and margin down by 158bps to 11.8%. Despite healthy improvement in advertisement & other cost, the YoY profit numbers were strong on the back of healthy topline performance, however, sequentially the cost saw decline but also topline growth was muted thus it reported weak numbers.

Robust growth in FY24: Jyothy Labs reported double digit topline growth of 10.9% YoY to Rs 2,756.9cr with volume growth of 9%. Further, its gross profit grew by 28.7% with margin at 49.1% with improvement of 680bps YoY due to decline in commodity prices. Further, even though the company has increased their spend by 30.9% in advertisements & brand building and also for other expenses, its EBITDA grew by 51.9% YoY to Rs 479.8cr with margin improvement of 470bps to 17.4%. Further, PAT saw growth of 54% YoY to Rs 369.3cr with margin improvement of 375bps to 13.4%.

Key highlights: 1) Management plan is to gain double digit growth and growth driven by volumes and also focus remain on liquid products in soaps & detergents. Also maintain its margin guidance at 16-17%. 2) Rural areas are seeing signs of revival. 3) Direct distribution has crossed 1.2mn outlets with 9,900+ Channel Partners. 4) New launches in the quarter were Ujala & Henko Liquid detergents and Margo Neem Naturals. 5) Maxo Coil and liquid vaporizer market share stood at 23.8% and 8.3% respectively in FY24. 6) They have on-boarded Kareena Kapoor as brand ambassador for Maxo brands and are spending heavily on advertisements in key markets.

Outlook & Valuation: Jyothy labs reported mixed numbers with steady growth as compared last year while subdued performance sequentially. Going ahead, the management plan is to focus on volume led growth, drive liquid products which are in demand, continue to spend behind brands, innovation & launches as well on advertisement & promotional spending to increase its recall value. Additionally, their plan is to expand distribution reach and also the rural market is seeing signs of pickup which will drive growth ahead. On the financial front, we expect double digit growth to continue with revenue/EBITDA/PAT to grow at 14.5%/17.3%/16.9% CAGR over FY24-26E and maintain Buy rating but target price revised downwards to Rs 550.

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