Religare revises ‘high conviction target’ to hold, sees 11% upside on midcap
Shares of Jyothy Labs neared their 52-week high levels of ₹466 after reporting decent July-September quarter results for fiscal 2023-24 (Q2FY24). Domestic brokerage firm Religare Broking has revised its rating on the midcap stock to ‘accumulate’ or ‘continue to hold’ after the ‘high conviction’ target was achieved at 27 per cent by the end of September 2023.
At a current market price (CMP) of ₹419, Religare has given a target price of ₹466 for Jyothi Labs and sees a potential upside of 11.2 per cent on the stock. On Thursday, shares of Jyothi Labs settled 4.29 per cent lower at RS 439.20 apiece on the BSE.
Jyothy Labs Q2 Results
Jyothy Labs reported a consolidated net profit of ₹103.98 crore in the September quarter, up 59.1 per cent from ₹65.35 crore registered a year ago. The company’s revenue from operations in the second quarter of current fiscal stood at ₹732.34 crore, registering a growth of 11.09 per cent, compared to ₹659.20 crore in the year-ago period.
The company’s earnings before interest, tax, depreciation and amortization (EBIDTA) for September quarter stood at ₹135 crore rising 69 per cent year-on-year (YoY). The EBIDTA margin was at 18.5 per cent in the quarter-under-review.
“The demand across our product portfolio has been stable. The inflationary environment has been a constant pressure on the consumption of FMCG products, however given our business potential, we continue to expand our distribution footprint across India and further strengthen our brands which has resulted in consistent business growth.” said M R Jyothy, Managing Director, Jyothy Labs Limited.
Jyothy Labs reports robust margin, segment growth
The company’s gross profit grew by 35 per cent YoY to ₹360 crore with margin improvement of 870 basis points YoY to 49.2 per cent led by decrease in raw material prices and strong volume growth.
The fabric care segment (~43 per cent of revenue) grew by 10.6 per cent YoY to ₹316.6 crore and posted the profit (~61 per cent of profit) of ₹82.8 crore, higher by 91 per cent YoY led by launch of new SKU’s, emphasis on distribution channels and sampling initiatives. Further, dishwashing profit grew by 48.6 per cent YoY to ₹52.3 crore driven by addition of new customers in its brands Exo & Pril, focusing on large packs and investing towards enhancing brand equity.
Religare’s outlook on Jyothy Labs
‘’Jyothi Labs reported decent Q2FY24 results led by growth across most of its segments, strong volume growth and healthy spends on advertisements. Further, the management plan is to drive volume led growth, invest behind its core brands by innovating more products and adding categories as well as continue to strengthen distribution reach,” said the brokerage in its report.
‘’On the financials, revenue/EBITDA is estimated to grow at 15 per cent/42.5 per cent CAGR over FY23-25E as we are optimistic on the growth prospect of Jyothy Labs and revise rating to Accumulate with target price to ₹466,” said Religare Broking.
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Updated: 16 Nov 2023, 07:56 PM IST
