Buy Jyothy Labs; target of Rs 655: Sharekhan

Sharekhan's research report on Jyothy Labs

Jyothy Labs Limited’s (JLL’s) Q1FY2025 operating performance was in line with our expectation with revenues growing by 8% (versus expectation of 8.5%) while OPM stood at 18% (versus expectation of 17.9%).Domestic volume grew by 10.8%, outpacing industry growth. Management targets double-digit revenue growth in FY2025, largely driven by volumes with improved market share across categories and higher growth in modern trade and e-Commerce channels.JLL eyes OPM of over 16-17%. Any improvement in the product mix and efficiencies might help to score better margins ahead of aspiration.

Outlook

Stock trades at 49x/42x its FY2025E/FY2026E EPS, respectively. With JLL being a consistent performer in the mid-cap space and good earnings visibility, we maintain a Buy with a revised PT of Rs. 655.