ADVERTISEMENT

Jyothy Labs - Embracing Transformation For Long-Term Growth: Axis Securities Initiates Coverage With A 'Buy'

Arrives at a target price of Rs 440/share, which implies an upside of 20% from the current market price.

<div class="paragraphs"><p>Jyothy Laboratories Ltd.’s range of products. (Source: Company website)</p></div>
Jyothy Laboratories Ltd.’s range of products. (Source: Company website)

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Axis Securities Report

Our confidence in Jyothy Laboratories Ltd.'s promising future is underpinned by the company's robust and consistent performance over the last several quarters, driven by a series of strategic initiatives it has undertaken in the recent past. These include:

  1. Scaling up value offerings through low unit packs and driving the premiumisation agenda, particularly in detergents and dishwash segments,

  2. Expanding into the larger body wash segment (toilet soap) as opposed to its earlier presence in the niche (natural) segment, thereby broadening its product portfolio,

  3. the management's strategic efforts to expand its direct distribution reach, targeting an increase from the current 1.1 million outlets, in tandem with enhancing on-ground execution through its strong sales force of 3,000 (a threefold increase over FY19) and streamlining the distribution channel.

These initiatives are anticipated to have a long-term positive impact on the company’s performance and should continue to propel its growth in the forthcoming years.

We project the company to achieve robust revenue/Ebitda/profit after tax growth at a compound annual growth rate of 13%/25%/25% over FY23-26E, compared to 13%/3%/5% CAGR over FY19-23.

Furthermore, we anticipate an increase in the Jyothy Labs' return on equity from 15% in FY19 to 21% in FY26. At the current market price, the stock is trading at 32 times/29 times its FY25/26 earnings per share and with a better earnings growth visibility and return profile, the stock looks attractive in the small to midcap consumer space.

Click on the attachment to read the full report:

Axis Securities JyothyLabs-Initiating Coverage Note.pdf
Opinion
Aarti Drugs Q2 Results Review - Sluggish Export Demand Impacts API Sales: Dolat Capital

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.