Sharekhan's research report on Jyothy Labs
Management aspires to achieve consistent double-digit revenue growth (largely volume-led) in the coming years. Fabric care (detergents), Dish washing and personal care (soaps) to drive growth. OPM is likely to improve to 16% in FY2024 due to correction in the input prices. Operating efficiencies and scale benefits would help profitability improve steadily. The company had net cash of Rs. 283 crore as on March 31, 2023. Incremental cash flows will be utilized for inorganic initiatives or provide higher benefits to shareholders.
Outlook
We retain a Buy on Jyothy Labs with a revised price target of Rs. 375. The stock trades at 37x/31x its FY2024E and FY2025E earnings. Consistent earnings growth visibility and relative stable valuations make it a good pick in the small-to-mid cap consumer good space.
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