Buy Jyothy Labs Ltd For Target Rs. 507 By Sushil Finance
Highlights from the Quarter (Q1FY26):
Jyothy Labs Ltd (JLL) reported a flat quarterly net revenue of Rs.770.7cr for Q1FY26, marginally higher by 2.1% YoY and higher by 13.1% on a QoQ basis. The company reported an EBITDA of Rs.143.6cr for the quarter vs Rs.127.5cr for the same quarter in the previous year and Rs.147.3cr in the preceding quarter. Subsequently, the company posted a net profit of Rs.96.8cr for the quarter.
JLL delivered stable volumes in Q1 despite urban demand pressures and high competition. The management mentioned that the next 2 quarters remain challenging with margin pressures and muted value growth, however, it is optimistic of a meaningful recovery in H2FY26, supported by monsoon-led rural demand, festive spending, easing costs, and a stronger innovation push.
The company is actively working to turn around the household insecticide category and is hopeful that it will become profitable by the second half of FY27. Fabric care delivered satisfactory mid-single-digit volume growth in both the Main Wash and Post Wash segments. Liquid detergents more than doubled growth versus last year, with strong sequential double-digit growth. The company launched Ujala Young & Fresh, a fabric conditioner, with a TV commercial featuring actress Keerthy Suresh.
The company aims to maintain an Operating EBITDA margin between 16% and 17% for the full year FY26. The company is committed to investing in its brands, with marketing spend expected to hover between 8% and 9% on an annualized basis in the near term. The first half of FY26 is expected to be difficult, with slight pressure on top-line growth and potential stress on EBITDA margins. The second half is expected to be better due to anticipated demand improvement and the full impact of planned price increases flowing into the P&L.
OUTLOOK AND VALUATION
We are revising the target price for Jyothy Labs Ltd from Rs.620 to Rs.507, due to the muted growth in revenue and margins in the previous year. However, we still remain bullish due to an anticipated recovery as well as the company’s rigorous push towards innovation. We expect FY27E revenue at Rs.3507.8cr, EBITDA of Rs.659.5cr at an EBITDA margin of 18.8% and PAT of Rs.503.2cr. We estimate FY27E EPS at Rs.13.7, and assign a PE multiple of 37x, maintaining the target price of Rs.507 (upside ~50.1%) from the current market price of Rs.336. We maintain our BUY Rating for Jyothy Labs Ltd over an investment horizon of 24 months.
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