Q3FY21 Result Update - Jyothy Laboratories - ICICI Direct

Jyothy Lab (JLL) reported healthy results with 15% volume growth led by robust growth in dishwashing & personal care segments. Standalone revenue grew 15.3% to Rs. 469.4 crore. Dishwashing, personal care & household insecticide (HI) segment revenue grew 21.1%, 48.2% & 10%, respectively, whereas fabric care business saw dismal 2.3% growth in Q3FY21. Though detergent segment has recovered fully, fabric whitener has only recovered to 90-95% of pre-Covid levels. We believe fabric whitener sales concentration is higher in south (specifically Kerala), which has been impacted by second wave of Covid cases & restricted out of home activity. The strong growth in most other segments was led by strong rural growth through smaller SKUs (Rs. 5-10 sachet pack) penetration & specifically high demand of natural brands in personal care. The company increased media spends by 44% to Rs. 35.1 crore largely to spend behind Maxo, Margo & new launches. Gross margins improved 67 bps largely due to benign crude based raw material cost. Despite higher ad spend by 147 bps, saving in overhead spends & gross margin uptick led to operating margins expansion by 102 bps to 17%. Led by strong growth in operating profit & lower interest cost, PAT increased 22.8% to Rs. 52.2 crore.

Valuation & Outlook

The strong profitable growth in 50% of the product portfolio (dishwashing, personal care) would help JLL compensate for saturation in fabric care & long turnaround time for HI. However, presence in all those categories with much larger & stronger peers limits growth opportunities for the company. The stock is trading at 24.2x & 21.8x FY22E & FY23E earnings. We maintain our HOLD recommendation on the stock with a revised target price of Rs. 175 share (earlier Rs. 150/share).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_JyothyLabs_Q3FY21.pdf

Shares of JYOTHY LABORATORIES LTD. was last trading in BSE at Rs.157.55 as compared to the previous close of Rs. 151.65. The total number of shares traded during the day was 37036 in over 1199 trades.

The stock hit an intraday high of Rs. 159 and intraday low of 151. The net turnover during the day was Rs. 5789013.

Source : Equity Bulls

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