ICICI Direct recommended hold rating on Jyothy Laboratories with a target price of Rs 180 in its research report dated July 24, 2019.
ICICI Direct's research report on Jyothy Laboratories
Jyothy Labs’ (JLL) revenues during Q1FY20 grew 2.3% YoY to Rs 411.6 crore impacted by slower growth in the dishwashing segment and de-growth in household insecticides (HI) segment. Volume growth was slower at 5.6% due to high base and tapering growth in rural regions. However, personal care segment YoY growth of 13% was impressive whereas fabric care grew 5.4% for the quarter. EBITDA margins expanded 144 bps to 15.9% driven by 72 bps saving in gross margins and 143 bps saving in other overheads to sales. Net profit increased 10.9% to Rs 35.9 crore impacted by one-off exceptional expense of Rs 3.8 crore related to a change in brand identity. Adjusting for exceptional item, net profit increased 20.9% YoY.
Outlook
Moreover, lower presence in high growing north India market also put company in relatively disadvantageous position. We downgrade our recommendation on the stock from BUY to HOLD with a revised target price of Rs 180 per share.
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