Buy Jyothy Labs; target of Rs 395: Geojit Financial Services

Geojit Financial Services research report on Jyothy Labs

Jyothy Labs Ltd. (JLL) is an Indian FMCG player with products across fabric care, dishwashing, mosquito repellents & personal care . For Q3FY25, revenue grew by 4% YoY. Volumes grew by 8% YoY while higher grammages and promotional prices impacted value growth. Main segments, fabric care & dishwash (78% mix) grew by 9% & 3.6%, respectively, while personal care declined by 3.6% YoY. EBITDA declined by 2%YoY as EBITDA margin dropped by 110bps YoY to 16.4%, mainly due to price cuts and higher operating expenses. The company has taken low single digit price hike in personal care in December end and is planning in Q4FY25 also to protect margins due to higher input costs. The overall demand environment was subdued, impacted by inflationary pressures and muted urban demand. The company remains cautiously optimistic about achieving double-digit volume growth.

Outlook

We roll forward to FY27E EPS, and value JYL at P/E of 30x (10yr avg=30x) to arrive at a target price of Rs. 395, maintain BUY rating considering expected improvement in demand and recent correction in stock price.