ICICI Securities research report on Jyothy Labs
We are repeating the headline used previously about JYL's performance. Our conviction is intact. Its performance continues to be impressive under Ms Jyothy's leadership. 1QFY24 underlying results stay good and improving – (1) +15% revenue growth YoY (+9% YoY volume growth) and (2) focus on laying (medium-term) building blocks – rural & LUP focus along with distribution expansion. The good performance was across segments led by Personal care and Fabric Care. Dishwashing also had a good quarter while HI had a decent recovery on low base. Gross margin and EBITDA margins have recovered well to ~48% (+800bps YoY) and ~17% (+710bps YoY), respectively. Jyothy Labs continues to gain market shares across most of its categories over last few years. We like management’s strategy of prioritising market share gains / volume growth. Stock is still in value-zone after 70% one-year returns, in our opinion. JYL remains top pick in Consumer Staples. BUY retained.
Outlook
We increase our earnings estimates by 1% for FY24. We model revenue / EBITDA / PAT CAGR of 12 / 27 / 34 (%) over FY23-25E. We maintain BUY with revised DCFbased target price of Rs340 (was Rs250). At our target price, the stock will trade at 30x P/E multiple Mar-25E. Key downside risks are higher competitive pressure and significant input cost inflation impacting margins.
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