MOSL: JYOTHY LABORATORIES (Neutral)-Positive rural outlook-raw material inflation – a key monitorable
Jyothy Laboratories: Positive rural outlook; raw material inflation – a key monitorable
(jyl IN, Mkt Cap USD1.0b, CMP INR392, TP INR425, 9% Upside, Neutral)
- Net sales rose 15.8% YoY to INR5.16b (est. of INR5.11b) in 4QFY18. EBITDA grew 45.8% YoY to INR884m (est. of INR791m). Adj. PAT after non-controlling interest fell 55.2% YoY to INR487m (est. of INR543m). Fabric care, Dishwashing and Personal care grew 13.6%, 21.3% and 54.0%, respectively, while Household insecticides fell 10% YoY on a like-to-like basis adjusted for GST.
- Gross margin expanded sharply by 670bp YoY to 50.6% in 4QFY18. EBITDA margin expanded 370bp YoY to 17.1% (est. of 15.5%), as A&P grew 410bp YoY to 10.4% off a very low base. On the other hand, there were savings on staff costs to the tune of 10bp YoY to 9.3% and on other expenses to the tune of 90bp YoY to 13.8% sales.
- FY18 consolidated: Net sales rose 4% YoY to INR17.5b. EBITDA grew 6% YoY to INR2.7b, while adj. net profit declined 27% YoY to INR1.5b.
- Analyst meet takeaways: (1) Management reiterated the positive rural growth outlook, which it had stated in the previous earnings call. (2) Current gross margin level of ~50% is sustainable. (3) Wholesale trade and CSD channels have normalized. (4) Company guided for 12-14% revenue growth in FY19, with EBITDA margin of 16-17% and PAT growth of 20-25%.
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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