Jyothy Laboratories - Time to reap synergy benefits with HIL - Angel Broking

Jyothy Laboratories Ltd. (JLL) (standalone) reported healthy set of numbers for 1QFY2013, with revenue posting a growth of 70.6% yoy to Rs.210cr, 11.7% higher than our estimate of Rs.188cr. The operating margin saw an improvement of 302bp yoy to 11.9% for the quarter; however, it saw a dip of 479bp sequential basis, mainly because of increase in employee cost and other expense. Moreover, the contribution of low margin segments - Exo and Maxo - in the total sales is higher which has also impacted the operating margin on qoq basis. The company reported growth of 25.7% yoy in its profit, which came in at Rs.18cr.

Henkel's 4QFY2012 performance: Henkel India (HIL) reported modest set of numbers for 1QFY2013. The topline grew by 14.2% on sequential basis mainly on the back of increase in realization (~10%) across the product portfolio and volume growth (~4%) with an operating margin of 10.2%. It posted a loss of Rs.3cr in 1QFY2013 vis-à-vis a loss of Rs.8cr in 1QFY2012 aided by margin expansion.

Outlook and valuation: We expect JLL's consolidated revenue to post a CAGR of 26.8% to Rs.1,468cr with an operating margin of 10.4% and profit to post a CAGR of 61.6% to Rs.116cr over FY2012-14E. We maintain Buy on JLL with an SOTP target price of Rs.145.

Source : Equity Bulls

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