Buy Jyothy Labs; target of Rs 430: ICICI Securities

ICICI Securities's research report on Jyothy Labs

JYL’s Q1FY26 performance was subdued with revenue/ volume growth of 1.4%/ 3.6% YoY impacted by heightened competitive intensity across segments. Volume growth was driven by Fabric care and Dishwash category, partially offset by the muted performance in HI (excluding HI, volume growth was 5%). Rural markets continue to outperform urban markets (impacted by downtrading). Going ahead, management remains cautiously optimistic with the recovery in H2 driven by NPD and recalibration packs, pricing and RTM strategy. GM contracted 328bps YoY to 48.0% on elevated input costs and promotions, leading to a 7% YoY EBITDA decline (margin -150bps to 16.5%). Management reiterated margin guidance of 17-18% for FY26. Maintain BUY.

Outlook

We cut our earnings estimates by ~2% for FY26-27E; modelling revenue / EBITDA / PAT CAGR of 7 / 8 / 8 (%) over FY25-27E. We maintain BUY with a DCF based revised target price of INR 430 (INR 450 previously). At our target price, the stock will trade at 36x P/E multiple FY27E. Key downside risks are higher competitive pressure and significant input cost inflation impacting margins.