'Buy' Maintained On Jyothy Labs By Yes Securities, Sees 22% Upside; Here's Why

Yes Securities Report

Jyothy Laboratories Ltd. is currently trading at ~39 times/33x/30x FY25E/ FY26E/ FY27E EPS. Due to valuation comfort, we maintain our Buy rating and an unchanged target price of Rs 500 (targeting ~36x FY’2027E EPS). Reclaiming double-digit growth and details around new category are key to re-rating.

Our medium-term view is pinned on the following arguments:

1. Sticking to broader strategy which over last three years has helped deliver superior revenue growth.

2. Distribution improvement and focus on rural markets should help sustain growth.

3. Ongoing portfolio rebalancing aimed at reducing dependence on Fabric Care and Dishwashing over mediumto-long term.

4. Cost optimization, operating leverage, loss reduction in Household Insecticides and Personal Care profitability reverting to earlier levels should aid margins over the next three-five years.

Growth rate should pick up starting next quarter but might not see market leading double-digit growth. With minor changes in our estimates, we now build revenue, Ebitda and adjusted profit after tax compound annual growth rate of 9.1%, 11.5% and 11.2%, respectively.

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