MOSL: JYOTHY LABORATORIES (Neutral)-Growth still elusive-fair valuations capping upside potential
Jyothy Laboratories: Growth still elusive; fair valuations capping upside potential
(JYL IN, Mkt Cap USD0.9b, CMP INR180, TP INR190, 6% Upside, Neutral)
- Reported standalone net sales grew 6.3% YoY to INR4.3b (our estimate: INR4.7b) in 3QFY19, led by volume growth of 6.1% YoY.
- EBITDA increased 5.2% YoY to INR718m (our estimate: INR796m). Adj. PAT grew 29.9% YoY to INR484m (our estimate: INR497m), led by a lower tax rate (16.7% v/s 22.7% in the year-ago period).
- Gross margin contracted 60bp YoY to 45.4% in 3QFY19. Staff cost increased marginally by 10bp YoY to 10.6% of sales, while other expenses were flat at 14% of sales. Lower ad spends (-60bp YoY to 5.5% of sales), thus, restricted EBITDA margin contraction to 20bp YoY (16.5% v/s our estimate of 17%).
- 9MFY19 performance: Sales/EBITDA/adj. PAT grew 9.8%/15.3%/26% YoY. Volumes grew by ~9% YoY. EBITDA margin expanded 80bp YoY to 16.1%.
- Key concall takeaways: (1) At the current level of crude prices, input price pressures have eased; crude impacts 30% of input prices for JYL. (2) JYL took a weighted average price hike of 3% in select SKUs of detergents. There was some level of promotions in 3QFY19 related to the re-launch of Henko Stain Care and Matic.
Jyothy Labs Limited, formerly Jyothy Laboratories Limited, is a multi-brand, multi-product company focused on fast-moving consumer goods industry. The Company is principally engaged in manufacturing and marketing of fabric whiteners, soaps, detergents, mosquito repellents, scrubber, bodycare and incense sticks. It operates through three segments: Soaps and Detergents, which includes fabric whiteners, fabric detergents, dish wash bar and soaps, including ayurvedic soaps; Home Care products, which includes incense sticks, scrubber, dhoop and mosquito repellents, and Others, which includes bodycare, tea and coffee. It products are under various brands, which include Henko, Mr. White, Ujala, More light, Chek, Pril, Exo, Maxo, Margo, Fa, Neem, Fabric Spa, Snoways, Busy easy and Wardrobe. Its subsidiaries include Jyothy Consumer Products Marketing Limited, Four Seasons Drycleaning Company Private Limited, Snoways Laundrers & Drycleaners Private Limited and Jyothy Fabricare Services Limited.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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