Sharekhan's research report on Jyothy Labs
Jyothy Labs Limited’s (JLL’s) Q4FY24 performance missed our expectation with revenues growing by 7% (versus expectation of 10.4%) while the OPM stood at 16.4% (versus expectation of 17.2%). FY2024 was relatively strong, with revenues growing by 11% (driven by 9% volume growth); with expected recovery in the rural market, focus on distribution expansion and increase in investments behind brands, the management is aspiring for double-digit revenue growth. Lower input prices aided the company to post strong 470 bps y-o-y expansion in OPM to 17.4% in FY2024. Management expects OPM to remain stable at 16-17% in the near term.
Outlook
Stock has corrected by 21% from its recent highs and is trading at 40x/34x its FY2025E/FY2026E EPS. With good earnings visibility, strong balance sheet (with cash balance of Rs. 600 crore+) and attractive valuations, we maintain a Buy with a revised PT of Rs. 530.
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