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Motilal Oswal Report
Jyothy Laboratories Ltd.'s Q1 FY21 results were above our low expectations. Sales growth was up only 4%.
Advertisement spend reduction of 40% (much higher than peers) drove Ebitda margin beat, despite gross margin being much below expectations.
Despite being much smaller than its peers under our coverage, the company has reported mere 2.5% sales compound annual growth rate over the past five years and neither the management commentary for July 2020, rest of the year or subsequent years indicates a substantial revival to steady-state double-digit sales growth.
Double-digit sales growth in FY21E is only because of low base due to 24% sales decline seen in Q4 FY20
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