Jyothy Laboratories - Management meet note - Kotak

We met the top management of Jyothy Laboratories. Key takeaways - (1) guidance of ~20-25% revenue growth and ~14-15% OPM for FY2014E maintained, (2) focus on 7 power brands and higher brand investments, re-launches and expanding reach to drive growth and (3) margin expansion to be led by focus on premiumization, selective price hikes and recent rationalization initiatives.

We expect FY2014E to be a year of increased aggression on sales and believe that the full force of the combined entity should start reflecting in financials from FY2015E. Retain ADD.

Turnaround on track, expect visible results only by FY2015E; retain ADD

We expect FY2014 to be a year of increased aggression on sales and believe that the full force of the combined entity should start reflecting in financials from FY2015 onwards.

We expect FY2014 to be another year of modest EPS (in the context of valuation) as increased D&A (on account of the intangible/goodwill amortization) will remain a drag. However, we expect strong earnings growth in FY2015 as the impact of higher D&A gets into the base. Our consolidated EPS estimates for FY2014E and FY2015E stand at Rs4.3/share and Rs8.3/share, respectively and reflects roughly Rs2.7/share of additional amortization impact. Retain ADD and our target price of Rs200/share, valuing the company at 24X FY2015E EPS.

Source : Equity Bulls

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