Jyothy Lab (JLL) delivered strong results with revenue growth of 7.6%, driven by volume growth of 8.5%. The dishwashing, household insecticide (HI) and personal care segments saw robust growth of 23.6%, 22.6% and 14.5%, respectively. The healthy growth in dishwashing has been driven by higher “home” consumption and greater use of hygiene products. Growth in the HI segment was driven by greater caution in health and hygiene. Likewise, growth in the personal care segment (Neem-based Margo soap, hand washing products and sanitizers) has been driven by increased consumer demand for natural products. The Tissue Care segment was down 11.7% due to dismal sales by Ujala Crisp & Shine & Henko (sales impacted by patchy operations of modern business channels). JLL has benefited from its strong presence in rural markets. Gross margins increased 184 basis points with a sharp drop in the prices of crude-based raw materials. Employee expenses for sales, general expenses for sales increased by 50 basis points each. The company maintained its ad spend at 6% of sales. Operating profit increased 12.4% to Rs. 88.9 crore. Operating margins increased 80 basis points to 17.8%. Led by strong growth in operating profit, PAT rose 14% to Rs. 60.7 crore.
Assessment and outlook
Although JLL may have witnessed profitable growth in the dishwashing and personal care segment over the years, saturation of the tissue care segment and continued losses / low profitability in the HI segment remain a concern. . The company has not been very aggressive behind the new launches and the ad spend has been quite low. The stock is trading at 23x and 21x earnings FY22E and FY23E, respectively. We maintain our HOLD recommendation on the stock with a revised price target of Rs. 150 / unit.
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Shares of JYOTHY LABORATOIRES LTD. was last trading on BSE at Rs.134.5 from the previous close of Rs. 136.15. The total number of shares traded during the day was 29,424 in more than 941 trades.
The share hit an intraday high of Rs. 137.8 and an intraday low of 133.8. The net turnover during the day was Rs. 3,997,497.