Buy Jyothy Labs Ltd for the Target Rs. 412 by Geojit Financial Services Ltd
Improving demand outlook
Jyothy Labs Ltd. (JLL) is an Indian FMCG player with products across fabric care, dishwashing, mosquito repellents and personal care
• JLL delivered a modest Q1FY26 performance amid a challenging demand environment, with revenue up by 1.4% YoY on 3.6% volume growth, while value growth was constrained by higher grammage and promotional pricing.
• Gross margin contracted 280bps YoY to 48.5%, due to input cost pressures and heightened competition in the Dish wash segment. EBITDA margin stood at 16.5%, in line with guidance, while PAT declined 4.9% YoY to Rs. 96.8cr.
• A&P Spend moderated to Rs. 58.9 crore (7.8% of revenue), balancing brand investment with margin protection. H2FY26 to see improvement in margins and the company guides for 16-17% EBITDA margin for FY26.
• Segment wise, Fabric Care led the growth (3% YoY) while Dishwash and Personal Care remained stable. Household Insecticides (HI) remained under pressure (-9.7% YoY), though management reiterated its turnaround focus with new launches and pricing actions.
• New launches across categories (Ujala Young & Fresh, Jovia, Maxo aerosols) are gaining traction, with more planned in H2FY26 to drive growth.
Outlook & Valuation
Rural momentum is expected to remain strong, supported by favorable monsoon, robust agri output, and higher MSPs while signs of urban recovery is visible as revival are emerging in modern trade and digital channels. A broader recovery anticipated from Q3FY26, aided by festive demand and easing inflation. H2FY26 likely to see improvement in margins as input costs stabilize and pricing actions normalize. Growth will be underpinned by innovation, brand equity, and channel agility, with the company also exploring inorganic opportunities for strategic expansion. JLL’s strong balance sheet and cash flow provide additional support. We value JLL at a P/E of 34x (2yr avg=36x), with a target price of Rs. 412, and recommend BUY rating supported by rural tailwinds, innovation-led growth, improving urban sentiment and recent stock price correction.
Key Highlights
• The company remains cautiously optimistic, expecting demand recovery from Q3FY26, supported by a favorable monsoon, easing inflation, and festive tailwinds. Continued investments in innovation, distribution, and brand building are expected to support mediumterm growth.
• Fabric Care: Mid-single-digit volume growth led by liquid detergents (Henko, Ujala, Mr. White). Ujala Young & Fresh fabric conditioner gained early traction with targeted campaigns.
• Dish Wash: High single-digit volume growth in Exo bars and double-digit growth in Pril liquid. Value growth impacted by grammageled competition.
• Personal Care: Flat YoY, but sequential improvement driven by Margo and new brand Jovia. Continued investment in media and distribution.
• Household Insecticides: Declined YoY; focus on profitability and turnaround with new formats (aerosols, racquets) and price hikes in coils. Management targets breakeven by H2FY27.
• JLL continues to recalibrate pack sizes, pricing, and promotional strategies to align with evolving consumer behavior across channels.
• Channels: Modern/E com/Q com are growing double digits but largely share a shift from general trade; urban remains soft; rural is ~40% mix and resilient.
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