Jyothy Laboratories - Q4FY13 Result Review - Angel Broking

For 4QFY2012, Jyothy Laboratories (JLL) reported merged numbers of JLL and Jyothy Consumer Products (JCPL). The company's topline grew by 24.5% yoy and came in at Rs. 273cr against our estimate of Rs. 223cr. The revenue from soaps and detergent segment witnessed a yoy growth of 25.7% and came in at Rs. 172cr, and the revenue from home care segment registered a growth of 2.1% yoy and stood at Rs. 84cr. The company's ad spend for 4QFY2013 stood at Rs. 22cr (8% of net sales). The company reported a contraction in EBITDA margin of 425bp yoy 546bp qoq and stood at 12.4%. This was mainly due to the restructuring of distribution (~2% EBITDA loss due to closing of 55 depots across country) and no selling of Ujala, the flagship brand, for 45 days as the company was in process of changing the packaging of Ujala (~5% EBITDA loss). The depreciation for the quarter stands at Rs. 16cr which included Rs. 11cr of amortization of goodwill which has been recognized in the books post the amalgamation of JLL and JCPL. Further, there is no tax reported because after the amalgamation, the company has got a tax shield due to the carry forward losses of JCPL. Consequently, the company reported a profit of Rs. 14cr.

Given the successful amalgamation and restructuring, we remain positive on the company from a long term perspective. The stock is currently under review.

Source : Equity Bulls

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