Sharekhan has given Buy recommendation for Jyothy Labs with a target price of Rs. 215 in its research report issued on Sep 20, 2022
Sharekhan’s research report on Jyothy Labs
Management retained double-digit revenue growth guidance for medium to long term which will be largely led by higher sales volume driven by defined strategies of distribution expansion, product launches and higher consumer connect. As raw material prices fall and volume growth is set to recover, OPM is expected to bounce back to 15% in FY2024. Better revenue mix with increase in contribution of high margin products (including LVs in household insecticide category) will further drive margins. Company had net cash of Rs. 85crore in FY2022. Consistent improvement in cash with stable working capital and improved earnings growth, the cash flows will improve in the coming years. RoE/RoCE likely to reach at around 20% in FY2024.
We retain a Buy on Jyothy Labs (JLL) with revised a price target of Rs. 215. The stock trades at 30.8x/22.9x its FY2023/24E earnings. Better growth prospects and a strengthening balance sheet make JLL a good pick in the mid-cap space.