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1
Jun 13, 2018
Jyothy Laboratories Ltd
India Research - Stock Broking
HOLD
Recommendation (Rs.)
CMP (as on Jun 12, 2018) 466
Target Price 508
Previous Target Price 380
Upside (%) 9
Stock Information
Mkt Cap (Rs.mn/US$ mn) 84734 / 1256
52-wk High/Low (Rs.) 487 / 324.5
3M Avg. daily value (Rs. mn)
88.1
Beta (x) 0.3
Sensex/Nifty 35693 / 10843
O/S Shares(mn) 181.8
Face Value (Rs.) 1.0
Shareholding Pattern (%)
Promoters 66.9
FIIs 16.4
DIIs 6.5
Others 10.2
Stock Performance (%)
1M 3M 6M 12M
Absolute 28 32 26 22
Relative to Sensex 28 25 17 6
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Analyst Contact
Vivek Ranjan Misra
040 - 3321 6273
vivekr.misra@karvy.com
For private circulation only. For important information about Karvy’s rating system and other disclosures
refer to the end of this material. Karvy Stock Broking Research is available on Thomson Reuters &
Bloomberg (Code: KRVY<GO>)
Exhibit 1: Valuation Summary
YE Mar (Rs. Mn) FY16 FY17 FY18 FY19E FY20E
Net Sales 16595 17492 17638 18883 20679
EBITDA 2220 2545 2708 2978 3309
EBITDA Margin (%) 13.4 14.5 15.4 15.8 16.0
Net Prot 772 2069 1864 2031 2311
EPS (Rs.) 4.3 11.4 10.3 11.2 12.7
RoE (%) 8.2 20.8 16.7 16.4 16.2
PE (x) 67.6 30.8 38.7 41.7 36.7
Source: Company, Karvy Research; *Represents multiples for FY16 - FY18 are based on historic market price
Earnings Revision (%)
YE Mar FY19E FY20E
Sales (%) 4.6 5.5
EBITDA (%) 0.8 0.6
PAT (%) 3.3 2.3
Source: Karvy Research
L
L
L
L
L
L
Company Update
Consumer Staples - Household & Personal Products
Jyothy Laboratories Ltd
Bloomberg Code: JYL IN
Positive momentum continued on the back of Double Digit
Growth in Volumes
Jyothy Laboratories Ltd (JLL) has reported healthy set of volume numbers i.e. 11.4%
growth in Q4FY18 and we expect that the management will be able to continue
the momentum in volumes. Revenue from operations of the company improved to
Rs. 5168 Mn in Q4FY18 from Rs. 4661 Mn in Q4FY17 registering 10.9% growth
YoY. The company has planned to expand its presence in Ayurveda segment which
is expected to increase revenues from personal care segment. During the quarter,
Personal Care segment has registered 48.5% YoY revenue growth on the back of
Margo brand leveraging on naturals portfolio. The company is aiming to launch a
series of products in the Ayurvedic and Naturals portfolio.
During this quarter, the company has reported gross margin at 50.6% improved
by 427 bps from 46.3% during Q4FY17 on the back of better product mix and
lower input cost. The company has reported EBITDA at Rs. 884 Mn registering
45.8% growth compared to Rs. 606 Mn during Q4FY17. EBITDA margin improved
to 17.1% during this quarter compared to 13.0% during Q4FY17. Advertisement
& Sales Promotion expense increased from Rs. 281 Mn during Q4FY17 to
Rs. 538 Mn during this quarter clocking 10.4% of Revenue from operations, as the
company has continued investing in brand building and campaigning.
Valuation and Risks
JLL is capturing more market share with its improving operational eciencies
and expansion strategies. We have revised our Revenue from operations growth
estimates for FY19E from 6.1% to 7.1% and for FY20E from 8.5% to 9.5%. At CMP
of Rs. 466 per share, the stock is trading at 36.7x FY20E EPS. We believe that the
valuations are stretched already, so we value the company at 40.0x (marginally
above the 1-year average 1 year forward P/E) and arrive at revised target price of
Rs. 508 with a potential upside of 9% with “HOLD” rating. However, volatility in raw
material prices and competition from other players are the key risks to earnings
growth.
85
100
115
130
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
May-18
Jun-18
Jyothy Laboratories Ltd
Sensex
2
Jun 13, 2018
Jyothy Laboratories Ltd
Exhibit 3: Q4FY18
YE Mar (Rs. Mn) Q4FY18 Q3FY18 QoQ (%) Q4FY17 YoY (%)
Revenue from operations 5168 4312 19.8 4661 10.9
Expenditure 4284 3619 18.4 4054 5.7
EBITDA 884 693 27.6 606 45.8
Depreciation 81 78 4.4 83 (2.2)
Interest 141 120 17.2 99 42.6
PBT 1070 517 106.8 446 140.1
Ta x 311 188 65.0 (629) NM
PAT 760 329 130.7 1074 (29.3)
EBITDA Margin (%) 17.1 16.1 104 bps 13.0 410 bps
EBIT Margin (%) 23.4 14.8 864 bps 11.7 1175 bps
Net Prot Margin (%) 14.7 7.6 706 bps 23.0 (835) bps
Source: Company, Karvy Research
Exhibit 4: Segmental Financials
YE Mar (Rs. Mn) Q4FY18 Q3FY18 QoQ (%) Q4FY17 YoY (%)
Segment-wise revenues
Dishwashing 1430 1410 1.4 1209 18.3
Fabric Care 1941 1884 3.0 1820 6.7
Household Insecticides 1116 375 197.3 1111 0.4
Personal Care 493 445 10.8 332 48.5
Laundry Service 96 113 (15.6) 113 (15.6)
Other 92 84 9.4 77 19.8
Inter Segment Revenue 0 0 - (2) -
Segment-wise EBIT
Dishwashing 263 222 19 132 100
Fabric Care 514 416 24 415 24
Household Insecticides 75 (11) NM 20 283
Personal Care 35 94 (63) 66 (47)
Laundry Service (43) (26) NM (41) NM
Other 3 (30) NM 8 (59)
Segment-wise EBIT Margin (%)
Dishwashing 18.4 15.7 268 bps 10.9 751 bps
Fabric Care 26.5 22.1 440 bps 22.8 369 bps
Household Insecticides 6.7 (2.9) 955 bps 1.8 494 bps
Personal Care 7.0 21.1 (1408) bps 19.8 (1274) bps
Laundry Service (44.5) (23.2) (2134) bps (36.0) (852) bps
Other 3.6 (36.1) 3969 bps 10.5 (695) bps
Source: Company, Karvy Research
Exhibit 2: Segmental Revenues
Segmental Revenues (Rs. Mn) Q4FY18 Q4FY17 Change (%) *Q4FY17 Change (%)
Fabric Care 1941 1820 6.7 1710 13.5
Dishwashing 1430 1209 18.3 1180 21.2
Household Insecticides 1116 1111 0.4 1030 8.3
Personal Care 493 332 48.5 320 54.2
Laundry Services 96 113 (15.6) 110 (13.2)
Other Products 92 77 19.8 70 31.6
Source: Company, Karvy Research, * GST Comparable
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Jun 13, 2018
Jyothy Laboratories Ltd
Exhibit 7: Net sales (Rs. Mn)
Source: Company, Karvy Research
Exhibit 10: EPS (Rs.)
Source: Company, Karvy Research
Exhibit 8: Gross Margin (%)
Source: Company, Karvy Research
Exhibit 9: Advertisement and Sales Promotion expenses (Rs. Mn)
Source: Company, Karvy Research
Exhibit 11: Change in Earnings Estimates
YE Mar (Rs. Mn)
FY19E FY20E
Old New % Change Old New % Change
Net Sales 18061 18883 4.6 19601 20679 5.5
EBITDA 2955 2978 0.8 3289 3309 0.6
EBITDA Margin (%) 16.4 15.8 (59) bps 16.8 16.0 (78) bps
Adj. PAT 1965 2031 3.3 2260 2311 2.3
EPS (Rs.) 10.8 11.2 3.4 12.4 12.7 2.4
Source: Karvy Research
4661
3858
4299
4312
0
1000
2000
3000
4000
5000
6000
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Net sales (Rs. Mn)
46.3
54.9
48.1
48.3
50.6
0
10
20
30
40
50
60
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Gross Margin (%)
6.0
1.4
2.6
1.9
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
EPS (Rs.)
Exhibit 5: Power Brands
(Rs. Mn) Q4FY18 Q4FY17 Change (%)
Ujala 1080 1030 4.9
Exo 1080 910 18.7
Maxo 1120 1110 0.9
Henko 490 440 11.4
Margo 430 290 48.3
Pril 360 300 20.0
Total Power Brands 4560 4080 11.8
Source: Company, Karvy Research
Exhibit 6: Key Ratios (%)
Q4FY18 Q4FY17 Change (bps)
Gross Margin 50.6 46.3 428
Operating EBITDA Margin 17.1 13.0 409
PAT Margin 14.7 23.3
#
(864)
Advertisement & Sales
Promotion
10.4 6.0 436
Source: Company, Karvy Research,
# Tax benet of Rs. 629 Mn accrued to the company during Q4FY17 from the merger of Jyothy
Consumer Products Marketing Ltd (100% subsidiary company)
281
437
346
325
0
110
220
330
440
550
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Advertisement and Sales Promotion expenses (Rs. Mn)
4
Jun 13, 2018
Jyothy Laboratories Ltd
We value the stock at
40.0x which is marginally
above last 1 year average
1 year forward P/E.
Exhibit 12: Jyothy Laboratories 1year forward PE Band
Source: Bloomberg, Karvy Research
Exhibit 13: BSE FMCG Index 10 year PE Band
Source: Bloomberg, Karvy Research
250
300
350
400
450
500
Jun-17
Jun-17
Jun-17
Jul-17
Jul-17
Aug-17
Aug-17
Sep-17
Sep-17
Oct-17
Oct-17
Nov
-17
Nov-17
Dec
-17
Dec-17
Dec-17
Jan-18
Jan-18
Feb-18
Feb-18
Mar-18
Mar-18
Apr-18
Apr-18
May-18
May-18
Jun-18
Price (Rs.)
40x
36.9x
33.8x
30.7x
27.6x
0
6000
12000
18000
Jun-08
Nov-08
Apr-09
Sep-09
Feb-10
Jul-10
Dec-10
May-11
Oct-11
Mar-12
Aug-12
Jan-13
Jun-13
Nov-13
Apr-14
Sep-14
Feb-15
Jul-15
Dec-15
May-16
Oct-16
Mar-17
Aug-17
Jan-18
Jun-18
Price (Rs.)
64.4x
50.7x
37x
23.3x
9.6x
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Jun 13, 2018
Jyothy Laboratories Ltd
Financials
Exhibit 14: Income Statement
YE Mar (Rs. Mn) FY16 FY17 FY18 FY19E FY20E
Total Revenue 16595 17492 17638 18883 20679
Growth (%) 6.4 5.4 0.8 7.1 9.5
Operating Expenses 14375 14947 14929 15905 17370
EBITDA 2220 2545 2708 2978 3309
Growth (%) 43 15 6 10 11
Depreciation & Amortization 314 301 311 376 372
Other Income 143 107 491 540 594
EBIT 2049 2351 2888 3142 3531
Interest Expenses 618 565 481 505 530
PBT 1431 1787 2407 2637 3001
Tax 693 (255) 619 607 690
Adjusted PAT 772 2069 1864 2031 2311
Growth (%) (36.3) 168.1 (9.9) 8.9 13.8
Source: Company, Karvy Research
Exhibit 15: Balance Sheet
YE Mar (Rs. Mn) FY16 FY17 FY18 FY19E FY20E
Cash & Bank Balances 612 1034 1367 2943 4847
Sundry Debtors 941 1171 1608 1600 1459
Inventory 1851 1964 1884 1738 1661
Other Current assets 1769 1676 3137 4650 6495
Gross Block 3128 3407 3355 3359 3331
Net Block 2814 3107 3044 2982 2959
CWIP 79 88 153 153 153
Miscellaneous 9629 9560 8598 6812 4719
Total Assets 17696 18600 19790 20878 22294
Other Current liabilities 8048 6931 5361 5240 5053
Debt 73 547 2806 2235 1774
Non-current liabilities 587 299 321 288 260
Total Liabilities 8708 7777 8487 7763 7087
Shareholders Equity 181 182 182 182 182
Reserves & Surplus 8834 10708 11260 13072 15164
Total Networth 9015 10890 11442 13254 15346
Minority Interest (27) (67) (140) (140) (140)
Total Networth & Liabilities 17696 18600 19790 20878 22294
Source: Company, Karvy Research
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Jun 13, 2018
Jyothy Laboratories Ltd
Exhibit 16: Cash Flow Statement
YE Mar (Rs. Mn) FY16 FY17 FY18 FY19E FY20E
PBT 1431 1787 2407 2637 3001
Depreciation 314 301 311 376 372
Interest (net) 618 565 481 505 530
Tax Paid (517) (309) (619) (607) (690)
Inc/dec in Net WC 30 (656) (1487) 274 248
Other Income (44) (72) 0 0 0
Other non cash items 89 18 0 0 0
Cash ow from operating activities 1922 1633 1094 3186 3461
Inc/dec in capital expenditure (282) (577) (313) (315) (348)
Others 1363 407 (847) 0 0
Cash ow from investing activities 1082 (170) (1160) (315) (348)
Issue / Redemption of Debentures (net) 3 1 0 0 0
Inc/dec in borrowings (1168) 474 2259 (571) (460)
Dividend paid (1743) (218) (1313) (219) (219)
Interest & Other (116) (1555) (481) (505) (530)
Cash ow from nancing activities (3024) (1298) 465 (1295) (1209)
Net change in cash (21) 164 398 1577 1903
Source: Company, Karvy Research
Exhibit 17: Key Ratios
YE Mar FY16 FY17 FY18 FY19E FY20E
EBITDA Margin (%) 13.4 14.5 15.4 15.8 16.0
EBIT Margin (%) 12.3 13.4 16.4 16.6 17.1
Net Prot Margin (%) 4.7 11.8 10.6 10.8 11.2
Dividend Payout Ratio (%) 187.7 8.8 58.5 9.0 7.9
Net Debt/Equity (x) (0.06) (0.04) 0.13 (0.05) (0.20)
RoE (%) 8.2 20.8 16.7 16.4 16.2
RoCE (%) 17.3 22.6 25.3 25.1 24.4
Source: Company, Karvy Research
Exhibit 18: Valuation Parameters
YE Mar FY16 FY17 FY18 FY19E FY20E
EPS (Rs.) 4.3 11.4 10.3 11.2 12.7
DPS (Rs.) 8.0 1.0 6.0 1.0 1.0
BVPS (Rs.) 49.8 59.9 62.9 72.9 84.3
PE (x) 67.6 30.8 38.7 41.7 36.7
P/BV (x) 5.9 5.9 6.3 6.4 5.5
EV/EBITDA (x) 25.1 26.6 26.9 28.8 25.9
EV/Sales (x) 3.5 4.0 4.2 4.5 4.1
Source: Company, Karvy Research; *Represents multiples for FY16 - FY18 are based on historic market price
7
Jun 13, 2018
Jyothy Laboratories Ltd
Stock Ratings Absolute Returns
Buy : > 15%
Hold : 5-15%
Sell : < 5%
Connect & Discuss More at
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y Analyst certication: The following analyst(s), Vivek Ranjan Misra, who is (are) primarily responsible for this report and whose name(s) is/are mentioned
therein, certify (ies) that the views expressed herein accurately reect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no
part of his (their) compensation was, is or will be directly or indirectly related to the specic recommendation(s) or views contained in this research report.
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