Jyothy Labs’ Q1FY2023 operating performance was mixed with revenue growing by 13.7% to Rs. 597.2 crore, while OPM declined by 202 bps y-o-y to 10%; PAT grew by 18.7% y-o-y to Rs. 48 crore (due to higher other income and lower tax). All key categories except household insecticides and personal care registered good growth. Fabric care and dishwashing grew by 38.6% and 9.6%, respectively (household insecticide decreased by 37.5% y-o-y). Volume growth excluding the household insecticide business stood at 22% y-o-y. Management is focusing on achieving volume-led revenue growth in the medium term on back of distribution expansion, good traction to lower unit packs in key categories, and market share gains. OPM has bottomed-out and is expected to improve from Q3FY2023.
OutlookThe stock is currently trading at discounted valuation of 26.2x/19.1x its FY2023E/FY2024E EPS. We maintain Buy with a revised PT of Rs. 200.
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