Jyothy Laboratories a safe bet, says Tater

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Jyothy Laboratories a safe bet, says Tater

Jyothy Laboratories is a safe bet, says Aashish Tater, Head of Research, Fort Share Broking.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Aashish Tater See what other Experts & Brokerages are saying about Jyothy Laboratories See messages about Jyothy Laboratories

Jyothy Laboratories is a safe bet, says Aashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, "For the last one year we have been pushing Amar Remedies. It's a one-stop shop where there are dental products than anything else. We have a renewed interest in Jyothy Labs. In 2010 we were buyers of Jyothy Labs, 2011 we did not even look at it, we booked out of it. Now again we have a renewed interest into it because it is not a one-stop-shop of detergents but because of its acquisition of Henkel India, it has got a product portfolio - Neem, Margo, Fa - all these products are well known."

He further added, "The company needs an operational expansion which will take some time. Before that the stock has already been punished by the market. Think from a two-two-and-half year's perspective. The company is sitting on a market cap of close to Rs 1,300 crore at current market price with debt and taking an enterprise value of less than Rs 2,000 crore. The company in the next two-and-half years could do at least revenue of over Rs 1,200 crore, almost a 100% upside."

"If I take a call that the market was paying on a standalone basis to this particular share Rs 270, with the product portfolio and a larger brand in its portfolio, the stock could again go and test those Rs 270-280 levels in less than two years. The stock is right now at Rs 160. A defensive bet into FMCG sector with larger product portfolio and a downside risk limited to that Rs 140-150. If you see, the promoters have actually given disclaimers of buying the stock in December when the stock was hovering around that Rs 140-150 odd mark."

"We feel that on the downside with patience if you hold a quantity from a longer-term perspective, you would make at least 30% return YoY from next two years perspective. A very safe bet, good brand portfolio and with operational performance again on the company's side because this quarter was a good quarter but we would still wait and watch for the next two quarters. If the company actually does that what we are expecting, the stock can even cross the Rs 300 mark this time than testing the Rs 270 odd high of 2011."