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Buy Jyothy Labs: target of Rs 175: Sharekhan

Sharekhan is bullish on Jyothy Labs has recommended buy rating on the stock with a target price of Rs 175 in its research report dated May 24, 2022.

May 25, 2022 / 05:29 PM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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Sharekhan's research report on Jyothy Labs


Jyothy Labs Limited’s Q4FY2022 operating performance was in-line with our expectation. Revenue grew ~10% to Rs. 546.7 crore, while OPM fell 180 bps to 12.5%; PAT grew 8.0% y-o-y to Rs. 48 crore (led by lower incidence of tax). All key categories except household insecticides registered double-digit growth in Q4. Fabric care, dishwashing, and personal products grew 18%, 12%, and 12%, respectively. Management is focusing on achieving double-digit revenue growth through market share gains, category development, and distribution expansion in the medium term. OPM would recover to 15-16% once raw-material inflation cools off.


Outlook


The stock is currently trading at discounted valuation of 22.6x/17.5x its FY2023E/FY2024E EPS. We maintain Buy with a revised PT of Rs. 175.


For all recommendations report, click here

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first published: May 25, 2022 05:29 pm
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