About the Company

Jyothy Laboratories was founded in 1983 by a promising entrepreneur MP Ramachandran in Thrissur, Kerala. He began his dream project, Jyothy Laboratories with Rs 5,000 and a vision to create an impact by touching people’s lives. What began as a proprietary concern that manufactured and sold a single product in a single district has grown to become a multi-brand, multi-product company with operations all over the country. They are present in four market segment: fabric care, home care, personal care and dish wash.

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Q3FY20 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
  Q3FY20 Q3FY19 YoY % Q2FY20 QoQ % 9MFY20 9MFY19 YoY%
Sales 407 434 -6.22% 464 -12.28% 1283 1265 1.42%
PBT 44 58 -24.14% 60 -26.67% 146 157 -7.01%
PAT 43 48 -10.42% 53 -18.87% 132 125 5.60%

 

Consolidated Financials (In Crs)
  Q3FY20 Q3FY19 YoY % Q2FY20 QoQ % 9MFY20 9MFY19 YoY%
Sales 421 447 -5.82% 475 -11.37% 1319 1297 1.70%
PBT 49 64 -23.44% 63 -22.22% 158 169 -6.51%
PAT 47 53 -11.32% 56 -16.07% 142 136 4.41%

 

Detailed Results

      1. Jyothy Labs had a subdued quarter.
      2. Consolidated quarterly revenues were down 5.9% (volume down by 5.6%)
      3. The gross margin for the quarter improved slightly from 46.5% last year to 48.7%.
      4. Operating EBITDA at 15.8% (Rs 66.3 cr) Vs 16.1% (Rs 72.1 cr) in the same period last year, down by 8%.
      5. PAT at Rs 45 cr as against Rs 51.1 cr, down by 12%.
      6. YTD numbers were slightly better.
        1. Revenues growth of 1.6% Y0Y.
        2. Operating EBITDA at 16% (Rs 210.5 cr) Vs 15.4% (Rs 199.8 cr) in the same period last year, up by 5.5%.
      • PAT at Rs 136 cr as against Rs 130.8 cr, up by 4%.
      1. Reduction in Revenue of 5.9% primarily due to:
        1. One-off Moderation in Institutional Sales (impacting sales by 4%)
        2. As a result of General Trade (GT) channel facing rural slowdown & working capital constraints at distributor & wholesale level (impacting sales by 1.9%)
      2. Despite volumes being muted in almost all categories, market share across all brands continue to remain intact as there was an industrywide slowdown.
      3. Category wise break-up of 9MFY20 Revenue Growth:
        1. Fabric Care: up by 2%
        2. Dishwashing: up by 3.3%
        3. Household Insecticides: down by -5.6%
        4. Personal Care: up by 4%
        5. Laundry Services: up by 4.5%

Investor Conference Call Highlights

  1. During the quarter due to the slowdown in the economy, the demand scenario was tepid. Urban demand was stable but rural off-take was muted.
  2. Working capital has been stretched for channel partners.
  3. Categories that have lower penetration like dish-wash and insecticides have seen better growth.
  4. The company has not extended credit for the channel partners to maintain business hygiene. However, it has helped channel partners to reduce inventories.
  5. General Trade forms around 80% of the total volumes. Remaining is Modern trade and others.
  6. The gross margin has gone up due to the softening of Raw material prices and process efficiency.
  7. As per the management, the next couple of quarters’ performance will be dictated by the macro situation.
  8. Management says that it is too early to speak about any impact of Coronavirus in the company’s business. They hope that they would not be affected.
  9. In the soap category, the company is into a niche sub-segment with its product Margo. So, they do not need to engage in the price war which was happening in the main soap category between the competitors.
  10. Inventory days with the distributors have come down from 30 days to 22-25 days.
  11. Management refrained from giving any guidance on Sales for FY21. They would be able to give guidance only after Q4FY20.
  12. Margo facewash was launched in the quarter and hence advertising expenses for personal care had gone up.
  13. As the management views that the raw material prices will remain soft, they believe margins in the personal care segment would remain intact despite advertisement spends.
  14. In the household insecticide, coils form 60% and liquids form 40% of the total sales for the company.
  15. 40% of the total business of the company comes from the south market and that continues to do well compared to the rest of the country.
  16. The tax rate for the full year would be around 15% and the company expects a similar number for next year as well.
  17. Tax expense low because of two reasons:
    1. lower MAT, and
    2. Increased exemptions from plants exercising benefit of Sec 80 IA of Income Tax.

Analyst’s View

Jyothy Labs is a consistent performer in the FMCG segment in India. They have successfully carved out a niche for themselves and have established themselves as market leaders in the fabric care and dishwashing segment. The performance of the company was tepid in this quarter due to a slowdown in the economy. Rural demand was very subdued compared to urban demand. It remains to be seen how the company will be able to come out of this slowdown in demand. They have maintained the policy of not extending credit to distributors. However, working capital has been stretched for channel partners. The company has helped the channel partners reduce the inventory levels. Management has refrained from making any guidance for FY21 as it is difficult to anticipate the market movements currently. Nonetheless, given its strong brand portfolio and good market shares in respective categories, Jyothy Labs is a good FMCG stock to watch out for, particularly given the relative undervaluation with respect to the peers in the FMCG industry.


 

 

Q2 2020 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
Q2FY20 Q2FY19 YoY % Q1FY20 QoQ % H1FY20 H1FY19 YoY%
Sales 469.66 432.36 8.63% 416.47 12.77% 886.13 839.8 5.52%
PBT 59.77 56.89 5.06% 42.05* 42.14% 101.83* 98.56 3.32%
PAT 53.22 45.34 17.38% 35.91 48.20% 89.14 77.72 14.69%

 

Consolidated Financials (In Crs)
Q2FY20 Q2FY19 YoY % Q1FY20 QoQ % H1FY20 H1FY19 YoY%
Sales 480.32 441.57 8.78% 427.42 12.38% 907.74 859.78 5.58%
PBT 62.81 60.38 4.02% 46.18* 36.01% 112.77* 105.61 6.78%
PAT 53.59 46.15 16.12% 37.38 43.37% 90.97 79.64 14.23%

*Includes an exceptional loss of Rs 3.78 Cr

Detailed Results

    1. The Q2 was modest for the company with revenues rising 9% YoY both in standalone and consolidated terms.
    2. Standalone and consolidated profits for Q2 rose 17% and 16% YoY respectively. The gain was mainly on account of the reduced tax expenses under the new corporate tax regime.
    3. Volume growth was on par with revenue growth at 8.3% YoY.
    4. Gross margins were at 46.4% vs 46.7% in Q1FY19.
    5. Operating EBITDA came in at 16.6% in the current quarter vs 16.3% last year.
    6. Operating EBITDA margins improved 110 bps to 16.1% in H1FY20 vs H1FY19.
    7. The category wise breakup of revenue growth is as follows:
      • Fabric Care: 1% Up YoY
      • Dishwashing: 6% Up YoY
      • Household Insecticides: 3% Down YoY
      • Personal Care: 9% Up YoY
    8. Ujala Fabric Whitener now enjoys 82.1% market share in its category.
    9. The company saw encouraging demand for their new product Ujala Crisp & Shine which grew 24.8% YoY and is expected to be launched Karnataka in the next quarter.
    10. In the dishwashing segment, the market shares of Exo bar and Pril remained steady at 11.2% and 16 % respectively.
    11. The company launched Pril Tamarind in a 20 rupees pouch format in Q2 which was well received and is already 10% of total Pril sales.
    12. The household insecticides segment declined mainly due to delayed monsoon season in the key contributing states.
    13. Despite this, the Maxo coil and LV brands gained market share in the quarter. The Maxo Genius brand grew more than 55% YoY in the quarter.
    14. Personal Care was a segment that grew steadily in Fy20 with a category revenue growth of 10.1% YoY in H1FY20. The company launched a new product Margo Glycerine in Kerala in the quarter.

Investor Conference Call Highlights

  1. The management expects rural momentum to pick up post the festival season.
  2. The management feels that it is still early days to be speculating how to capture the spare market share from the spurious agarbathis but it has seen encouraging signs that point to the decline of the spurious products in the industry.
  3. The management has indicated that they will not institute price cuts in response to price cuts done by competitors as they believe that their product is highly differentiated and they remain confident of the brand’s pulling power.
  4. The company has a lot of branching opportunities like Margo Glycerine which are in the pipeline for the future.
  5. The company has not done anything to offer help to their distributors in terms of liquidity.
  6. The company expects a 10%-15% growth in the dishwashing segment.
  7. The management has maintained that they should be able to achieve their growth guidance for the year as they expect the agarbathi segment to do well after the import restrictions were put in on the segment which is good for domestic manufacturers.
  8. The full-year tax rate for the company will be 17% and they will continue on the same 19% tax rate as before.
  9. The slight margin improvement is mainly due to the change in product mix and margins are expected to be at current levels for the rest of the year.
  10. The management has maintained that it is not looking to make any acquisitions for the rest of the year but they will be on the lookout for potential opportunities.
  11. The breakup in urban-rural sales is around 60:40 and the management expects this ratio to remain stable.

Analyst’s View

Jyothy Labs is a consistent performer in the FMCG segment in India. They have successfully carved out a niche for themselves and have established themselves as market leaders in the fabric care and dishwashing segment. The performance of the company so far in H1 was modest with only 5.6% consolidated revenue growth. The fabric care and dishwashing segment which has been the mainstays for the company has maintained its steady growth trajectory and the company is moving forward with plans to enter new geographies with their existing product portfolio. The household insecticides segment which has been subdued for some time now has shown signs of revival and the import restrictions on agarbathis and the government crackdown on spurious agarbathis should provide a boost to the ailing industry and the company is expected to benefit from the same. It remains to be seen how the company will be able to capture the spare market share in the agarbathi segment and how fast will the household insecticides segment revive. Nonetheless, given its strong brand portfolio and good market shares in respective categories, Jyothy Labs is a good FMCG stock to watch out for, particularly given the relative undervaluation with respect to the peers in the FMCG industry.

 


 

 

Notes from Annual Report FY2018-19

Management Discussion Analysis

Industry Overview

The FMCG industry consists of Food & Beverages (F&B) (19%), Healthcare (31%) and Household & Personal Care (HPC) (50%) segments. This sector is expected to have grown 11-12% in FY19 according to Nielsen.

The rural segment has also been a big contributor to industry growth and is expected to be the new frontier for the industry growth in the years to come. According to IBEF, India’s rural FMCG market is estimated to grow to $220 billion by 2025 from $ 23.6 billion in 2018.

According to “Reimagining FMCG in India”, a report by BCG and CII, the industry is projected to expand at a CAGR of 14% between 2021-2025 to a size of $ 220-240 billion. The main factors behind this industry expansion are expected to be:

Brand Innovation in FY19

 

The company is gradually establishing itself as a national player with more than 2.8 million outlets across the country. It operates 26 manufacturing facilities across 22 locations and has a pan-India presence, supported by its extensive distribution network of 5,400+ stockists and sub-stockists.

Business Segment Review

Fabric Care Segment 

Brands

The company operates 5 main brands under this segment which are Ujala, Henko, Mr White, Chek and More Light. The combined FY19 revenues of this segment was Rs 725 Cr. The company launched a new product called Ujala Crisp & Shine Gold Collection in this segment in FY19.

Key Highlights

  • The fabric care business, the largest business, grew by 7.6% (on GST adjusted sales) during the FY 2018-19.
  • Ujala Franchise registered a 5% growth (on GST adjusted sales), led by new product innovation and campaigns across brands.
  • The company introduced Ujala Crisp & Shine ‘Gold Collection’ with the added feature of premium fragrances inspired by French Fine Fragrances. The brand extension was launched with a new campaign featuring the southern superstar ‘Suriya’ as the brand ambassador.
  • The Henko franchise reported a 10.3% growth (on GST adjusted sales), with complete refurbishing of Henko Matic and Henko Stain Care and relaunch with a far superior mix.
  • ‘Henko Stain Champion’, the Bucket Wash variant, was renamed as ‘Henko Stain Care’ and launched in the premium detergent space.
  • The company introduced a new pack of Ujala IDD.
  • Henko Lintelligent was upgraded and it continues to stay differentiated in the matic powder category owing to its lint reduction technology.

The company expects their Ujala product to continue to dominate the segment while the relaunch of the Henko Staincare should help consolidate brand image in the coming years.

Dishwashing Segment

Brands

The company operates 2 main brands in this segment which are: Exo and Pril. The FY19 revenues from this segment were at Rs 587 Cr. The company launched a new product called Pril Tamarind in this segment in FY19.

 

 

Key Highlights

 

  • The combined revenue growth in this segment was at 17.3% YoY.
  • Exo maintained its market share of 11.1%.
  • Pril gained 20 bps of market share to end the year at 16.6%.

 

Backed by product innovations and unique propositions, the company expects both these brands to gain market share in the near future. Their new product in this segment Pril Tamarind should help consolidate the brand’s position in the category and fuel improvement in market share.

 

Household Insecticides Segment

Brands

The company operates under a single brand Maxo in this segment. They sell mosquito repellent vaporizers and agarbathis. The revenues from this segment in FY19 were Rs 224 Cr. The segment has suffered a YoY decline due to a decline in overall household insecticides industry in India.

Key Highlights 

  • The segment revenues declined 2.5% YoY.
  • Maxo Liquid Vapouriser gained the market share by 50 basis points to 7.7%.
  • Maxo Coil gained the market share by 30 basis points to 21.3%.

Despite the revenue decline, the company managed to gain market share in both of its product categories. This highlights the good market position of the company in this industry segment and they expect this category to revive and grow faster than the market once the industry revives.

Personal Care Segment

Brands

 

 

The company operates 3 main brands in this segment. They are Margo, Neem and Fa. The combined revenues from this segment were Rs 192 Cr in FY19. The company launched a new product ‘Margo Glycerine’ in this segment.

Key Highlights

  • The segment revenues grew 6.9% YoY.
  • Margo showed a growth of 7.8% in FY19 (on GST adjusted sales).
  • The company launched a multi-media advertising campaign which garnered 2 million views in the first 2 weeks of the campaign on Youtube.

The company is looking to build the Margo Glycerine consumer base on the back of the original Margo Neem brand. They expect to carry out sustained marketing campaigns to expand this segment into non-traditional markets in India.

 

Laundry Services Segment

Brands

The company operates multiple brands in this category. They are Fabric Spa, Wardrobe, Four Seasons, Expert, Snoways and Clickwash. The segment revenues for this segment were Rs 40.3 Cr. The company has established as the largest laundry chain in India with over 140 units operating in Bengaluru, Delhi, Mumbai, Pune, Chennai, and Ahmedabad.

Key Highlights 

  • The segment revenue grew 18.5% YoY.
  • The market potential of this segment is huge at $ 76 billion, almost all of which is unorganized.
  • The company is the only organization in this industry with 3 ISO certifications (ISO 9001, 14001, 18001)

The company sees huge potential in this industry segment due to the lack of any organized players here. The company hopes to capitalize on the first-mover advantage and stay ahead of the competition by expanding into new cities and introducing new outlets using the franchisee model.

Financial performance in 2018-19

  • Brand Wise Revenue Distribution is given below:

  • The company witnessed modest revenue growth with 6% growth YoY in yearly revenues.
  • The normalized profits for the company also saw a modest rise with 9% YoY growth in PBT for FY19.
  • The company delivered an EBITDA margin of 16.2% which was in line with the previous guidance provided by them on the subject.
  • The yearly revenue growth for the different business areas in FY19 are as follows:
    • Fabric Care:                                       Up 7.6% YoY
    • Dishwashing:                                     Up 17.3% YoY
    • Household Pesticides:                     Down 2.5% YoY
    • Personal Care:                                   Up 6.9% YoY
    • Others:                                                Up 18.5% YoY
  • The company has reduced the days for working capital to 23 days as compared to 31 days last year.
  • The net debt to equity ratio has been reduced to 0.03 from 0.36 last year.
  • The company gave out a dividend of Rs 3 per share in FY19.

 

Analyst’s View

Jyothy Labs is a consistent performer in the FMCG segment in India. They have successfully carved out a niche for themselves and have established themselves as market leaders in the fabric care and dishwashing segment. The company has significant room to grow in these segments due to the presence of their power brands and the expansion into newer states for their lesser brands. The company is gearing for new product launches for Margo and Exo which will be significant for the company in the near future. It remains to be seen how the new brands perform. Further, we also need to watch out whether the declining household insecticides industry will continue to bring down revenues for the company in this segment. Nonetheless, Jyothy Labs remains an interesting FMCG company which is reasonably valued and have the potential to grow sustainably.


 

 

Q1 2020 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
Q1FY20 Q1FY19 YoY % Q4FY19 QoQ %
Sales 416.47 407.44 2.22% 515.64 -19.23%
PBT 42.05* 41.67 0.91% 70.86 -40.66%
PAT 35.91 32.38 10.90% 67.05** -46.44%

 

Consolidated Financials (In Crs)
Q1FY20 Q1FY19 YoY % Q4FY19 QoQ %
Sales 427.42 418.22 2.20% 527.81 -19.02%
PBT 46.18* 45.43 1.65% 73.75 -37.38%
PAT 37.38 33.49 11.62% 66.84*** -44.08%

*Includes an exceptional loss of Rs 3.78 Cr

**Includes a deferred tax credit of Rs 11 Cr

***Includes a deferred tax credit of Rs 8.48 Cr

 

Detailed Results

    1. The Q1 was dismal for the company with revenues rising only 2% YoY both in standalone and consolidated terms.
    2. Profits for Q1 were almost flat YoY but have fallen significantly since previous quarter.
    3. Volume growth was higher than revenue growth at 5.6% YoY.
    4. Gross margins improved to 48.6% from 47.9% in Q1FY19.
    5. Operating EBITDA came in at 15.5% in the current quarter vs 13.7% last year.
    6. The category wise breakup of revenue growth is as follows:
      • Fabric Care: 4% Up YoY
      • Dishwashing: 1% Up YoY
      • Household Insecticides: 6% Down YoY
      • Personal Care: 3% Up YoY
    7. The company saw encouraging demand for their new product Ujala Crisp & Shine which grew 21.8% YoY and is expected to be launched in Andhra Pradesh, West Bengal and Karnataka in the rest of the financial year.
    8. The Henko franchise also grew 23.3% YoY and cemented its spot as the fastest growing brand for the company.
    9. According to the company, the introduction of the new Exo Ginger required down-stocking of the pre-launch stocks which resulted in lower primary sales and thus muted growth for this brand.
    10. The household insecticides segment declined mainly due to delayed monsoon season in the key contributing states.
    11. Despite this, the Maxo coil and LV brands gained market share in the quarter. The Maxo Genius brand grew more than 20% in the quarter.
    12. The reasons for volume growth to outpace revenue growth for the company are that the products at the lower price end have grown faster and in highly competitive segments, the company has had to aggressively promote their products leading to the current situation.
    13. The gross margin expansion was due to fall in raw material prices and the lowest margin product of insecticide coil saw decline which helped push margins up.

Investor Conference Call Highlights

  1. The management believes that the demand scenario should pick up with normal monsoons and the company should witness positive volume growth.
  2. The company has revised its revenue growth guidance to 10%-12% from above 12% earlier.
  3. The company expects margins to remain stable and sustainable for the near future.
  4. The company expects the Exo brand to bounce back strongly in Q2 after the launch of Exo Ginger.
  5. The company maintains that it will keep its marketing and promotion aggressive to keep up with the industry and to promote its new brand image.
  6. The company expects the growth to be led by volumes due to intense competition in a price-sensitive market and high promotions and incentives by other makers to boost volumes.
  7. The company expects rural consumption to revive as the government starts to tackle the slowdown in the country and the advent of the late monsoon.
  8. In the household insecticides, the company is focused on capturing market share in the LV segment and to stay ahead of the competition in the segment which has been in decline for the last few years.
  9. The company expects to clock more than 10% growth in Margo for the year.
  10. The company is confident in their revised revenue growth because of the increasing market shares in all segment even in the HI segment where they have gained market share despite a decline in revenues in the segment.
  11. The company has not faced any adverse material impact from the water crisis in Chennai and South India.
  12. The company maintains that their growth in the Fabric Care segment will not be too fast but shall remain steady as they are not engaging in the price and marketing wars as other majors in this segment and are slowly and steadily carving their niche on the strong base of their whitener product.
  13. The company has seen a growth of almost more than 20% in the 10-rupee pack for Henko and they expect this segment to contribute significantly in the future. The growth in the other packs of half kg and one kg has been slightly lower than the overall growth for the brand.

Analyst’s View

Jyothy Labs is a consistent performer in the FMCG segment in India. They have successfully carved out a niche for themselves and have established themselves as market leaders in the fabric care and dishwashing segment. The company has significant room to grow in these segments due to the presence of their power brands and the expansion into newer states for their lesser brands. The company is gearing for new product launches for Margo and Exo which will be significant for the company in the near future. It remains to be seen whether their new brands will be as well-received or not. Further, we also need to watch out whether the declining household insecticides industry will continue to bring down revenues for the company in this segment. Nonetheless, Jyothy Labs remains an interesting FMCG stock which is still not as high priced as other FMCG majors in the market thus representing a value proposition for any investor looking into the theme of consumption.

 


 

Q4 2019 Updates

Financial Results & Highlights

                                                                Standalone Financials (In Crs)
Q4FY19 Q4FY18 YoY % Q3FY19 QoQ % FY19 FY18 %  Change
Sales 515.64 499.36 3.26% 441.27 16.85% 1796.7 1687.4 6.48%
PBT 70.86 85.36 -16.99% 58.09 21.98% 227.5 208.47 9.13%
PAT 67.05* 60.35 11.10% 48.41 38.50% 193.2** 160.5 20.37%

*Includes a deferred tax credit of Rs 11 Cr

**Includes a deferred tax credit of Rs 12.58 Cr

                 Consolidated
FY19 FY18 %  Change
1841.33 1752.74 5.05%
1598.3 1512 5.71%
197.6 178.9*** 10.45%

***Includes a deferred tax charge of Rs 21 Cr

Detailed Results

    1. The company witnessed modest revenue growth with 6% growth YoY in yearly revenues.
    2. The normalised profits for the company also saw modest rise with 9% YoY growth in PBT for FY19.
    3. The company delivered an EBITDA margin of 16.2% which was in line with the previous guidance.
    4. The yearly revenue growth for the different business areas in FY19 are as follows:
      • Fabric Care: Up 7.6% YoY
      • Dishwashing: Up 17.3% YoY
      • Household Pesticides: Down 2.5% YoY
      • Personal Care: Up 6.9% YoY
      • Others: Up 18.5% YoY
    5. The company has reduced the days for working capital to 23 days as compared to 31 days last year.
    6. The net debt to equity ratio has been reduced to 0.03 from 0.36 last year.
    7. The company currently enjoys 81.1% market share in the fabric care segment for their Ujala brand.
    8. Ujala has gained 3.2% market share in Maharashtra in the past quarter.
    9. Ujala detergent, which is only sold in Kerala now, grew 18% in FY19 while the industry segment grew only 8.5%. The Henko franchise saw growth of >10% in FY19.
    10. The dishwashing segment has outpaced the industry growth with market share of 11% and 16.7% for Exo and Pril brands.
    11. The Exo bar has grown >20% in FY19 which is almost double of the industry which grew 10.7% in the same period.
    12. In the household insecticide segment, the company ended with 21.2% and 7.7% market share in FY19 for their Maxo coil and Maxo LV products.
    13. The sales figures for their new product in this segment, Maxo Genius, has been good with 44.5% yearly revenue growth YoY and 69% YoY growth for the last quarter.
    14. In the Agarbathi, personal care and toilet cleaner segments, the company is focusing on sales and brand visibility and are undertaking marketing campaigns to do the same.
    15. In the year ahead, the company is focussing on maintaining the growth in their star segment of dishwashing while improving brand recognition and launching new products in other segments.

Analyst’s View

Jyothy Labs is a consistent performer in the FMCG segment in India. They have successfully carved out a niche for themselves and have established themselves as a formidable player in the fast-growing dishwashing segment. As this industry segment shifts from unorganized to organized, there is a lot of room of opportunity in this market. In other areas, the company has shown their product quality with successful pilots in Kerala which they expect to replicate in other states. Whether they will be as successful in other states as they have been in Kerala is a point to watch. Nonetheless, Jyothy Labs is a good bet on the FMCG sector especially given its relative undervaluation compared to other FMCG majors.

 


 

Q3 2019 Updates

Financial Results & Highlights

Standalone Financials (In INR Lacs)
Particulars (INR Cr) Q3FY19 Q3FY18 YoY Q2FY19 QoQ
Sales 44127 41354 6.71% 43236 2.06%
PBT 5809 4823 20.44% 5689 2.11%
PAT 4841 3728 29.86% 4534 6.77%

Detailed Results

    1. The Revenue and volume growth has been modest growing at 6% year on year
    2. PBT and PAT have risen 20.4% and 29.9% respectively emphasizing better margins compared to last year
    3. The growth in revenue segments YoY is as follows:
      • Fabric Care: 8% up to 193 Cr now
      • Dishwashing: 7% up to 150 Cr now
      • Household Insecticides: 7% up to 42 Cr now
      • Personal Care: (6.2) % down to 40 Cr now
      • Others: 8% up to 9 Cr now
      • Overall: 6% up to 434 Cr
    4. The decline in personal care products is due to drop in revenues of the product ‘Margo’ soap which has been attributed to lower sales due to the winter season.
    5. The management of the company remains optimistic about future growth especially in Henko, Pril, Margo and Maxo brands within which they are launching new products.
    6. They are also planning to expand to newer states with existing portfolio.

Investor Conference Call Highlights

  1. Expecting Pril market share to rise in the dishwashing segment in India with the launch of their new variant ‘Pril Tamarind’ which has been very well received in test markets.
  2. Expecting Maxo market share to rise in household insecticides market with the relaunch of their product ‘Maxo Genius’ in the mosquito repellent machine segment.
  3. Have a very expansive and optimistic outlook in their Maxo Agarbatti segment. Organized mosquito repellent coil segment market size in India is around Rs 500 Cr. The company is expecting their Maxo Agarbatti to capture a sizeable portion of the market in the next few years.
  4. The company believes that Maxo Agarbatti shall differentiate itself from the rest of the market by empahsizing its safety and high quality through the use of promotional and customer awareness campaigns.
  5. The company is also bullish on their Personal Care Segment with the launch of their new product ‘Margo Glycerine’ which they expect to do well in the near future.
  6. The company is also optimistic on their new product T-Shine which is a 100% organic toilet cleaner. They believe T-Shine can stand apart from the rest of its segment and capture a sizeable portion of the market in the next few years.
  7. Other than new products, the company’s sales force automation is set to be completed by the next quarter end so this should also yield significant benefits towards cost reduction and process optimization.
  8. All in all, the company is very optimistic in its forward outlook and expects to see sustained revenue growth for the next few years.

Analyst’s View

Jyothy Laboratories Ltd has been on a good upward trajectory for a while and the management is still optimistic in their forward outlook. The higher than proportional profit growth compared to revenue growth in comparison to last year shows the high margin they command for their products. Looking at the upcoming product launches across various segments, it is safe to say that Jyothy Labs is probably in for a good upward path for the near future and seems like a good investment opportunity in the FMCG industry.

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