Jyothy Labs rallies 9%, hits 4-year high in weak market

Shares of Jyothy Labs hit over four-year high of Rs 218 as they rallied 9 per cent on the BSE in Thursday's intra-day trade, bucking the overall market wakness. The stock was trading at its highest level since June 2018. It had hit a record high of Rs 249 on June 29, 2018. In comparison, the S&P BSE Sensex was down 0.61 per cent at 60,696 at 12:12 PM.

Jyothy Labs is primarily in home care and personal care segments which constitute 50 per cent of the Indian FMCG industry. The company operates across the fabric care, dish wash, household insecticides and personal care segments. Its six power brands - Ujala, Exo, Maxo, Henko, Margo and Pril - are a household name and hold significant brand equity among consumers. The company’s volume growth impacted with high inflationary pressure on the households.

In a challenging economic environment, the company has delivered a robust 12.6 per cent year-on-year (YoY) growth in consolidated revenue at Rs 659 crore for September quarter (Q2FY23) with equal emphasis on offering superior value and focus on distribution. Profit after tax jumped 48.6 per cent YoY at Rs 65.4 crore. Operating Ebitda improved 82 bps to 12.2 per cent from 11.38 per cent in a year ago quarter.

Going forward, the management believes, overall, demand environment is positive. With focus on digital led direct distribution, focus on rural India and investment in brand building will help us to achieve consistent sales growth and value creation.

The higher scale of business operations will drive operating leverage. The softening of commodity prices of crude oil, palm oil and others will reduce the inflationary impact on gross margins, the management said.

As the fourth largest sector in India, FMCG is growing at 14.9 per cent CAGR and is expected to touch $ 220 billion by 2025. Its three key segments, namely food and beverages, health care, and household and personal care products account for a share of ~19 per cent, 31 per cent and 50 per cent respectively. Toiletries and household products are among the top five products sold.

Notwithstanding the lockdowns due to the second wave of Covid-19 pandemic, the FMCG sector grew by 36.9 per cent in the April-June quarter of 2021. The retail market has shown consistent growth.