Sharekhan has given Buy recommendation for Jyothy Labs with a target price of Rs. 190 in its research report issued on Nov 03, 2021

Sharekhan’s research report on Jyothy Labs

Q2FY2022 numbers were mixed, with consolidated revenues rising 15% y-o-y (led by an 11.4% volume growth); gross margins decreased by ~800 bps affected by sharp increase in some of key input prices. All key categories registered double-digit revenue growth on a two-year CAGR basis. Fabric wash category registered a strong comeback with a 25% growth as mobility improved. Raw material inflation stood at 12% in Q2FY22. Price hikes and efficiencies would help in mitigating pressures. We expect OPM to recover to 16-17% by FY2024. Better cash flows, management’s focus on driving double-digit volume growth, better dividend payout and discounted valuation of 20.3x/16.5x its FY2023E/24E EPS makes it a good mid-cap pick.

Outlook

We maintain Buy with a revised price target of Rs. 190.

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