Jyothy Lab - Q2FY21 First Cut - ICICI Securities

(CMP - Rs. 132, MCap - Rs. 4,806 crore)

Jyothy lab posted Q2FY21 results with 7.6% sales growth & 14% earnings growth

Q2FY21 Earnings Summary

- Revenue witnessed a growth of 7.6% supported by strong 8.5% volume growth. Dishwashing, Household Insecticide & personal care segment saw strong 23.6%, 22.6% & 14.5% sales growth respectively. However, fabric care segment saw 11.7% decline in sales. The segment was impacted by lower sales of Fabric post wash segment given out of home activity remained restricted with periodic lockdown in some southern states. All the other segment witnessed strong growth given Jyothy Lab was able to leverage its larger rural presence.

- Gross margins expanded by 184 bps with sharp decline in crude based commodity prices. Employee spends to sales, overhead spends to sales increased by 50 bps each. The company maintained its advertisement spends at 6% to sales. Operating profit increased by 12.4% to Rs. 88.9 crore. Operating margins expanded by 80 bps to 17.8%

- Led by strong growth in operating profit & lower interest cost, Net profit increased by 14% to Rs. 60.7 crore

Jyothy lab has been beneficiary of strong rural growth in household insecticide, personal care & dishwashing segment. However, its flagship brand Ujala (Post Wash) witnessed a de-growth & it has been negatively impacted by reduced out of home activity. Though Jyothy lab has been benefited by near term disruption, we believe its product portfolio has limited growth opportunity with larger companies holding bigger pie of the category. We remain cautious on long term growth opportunities for the company.

We will be coming out with the detailed update after the conference call with the management.

Shares of JYOTHY LABS LTD. was last trading in BSE at Rs.132.6 as compared to the previous close of Rs. 130.5. The total number of shares traded during the day was 52095 in over 1925 trades.

The stock hit an intraday high of Rs. 134.65 and intraday low of 128.4. The net turnover during the day was Rs. 6869844.

Source : Equity Bulls

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