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M a r g i n s s u f f e r a s i g n i f i c a n t b l o w …
Jyothy Laboratories (JLL) in Q2FY12 reported a moderate growth of 6.8%
in its revenues that stood at | 154.6 crore against | 144.8 crore in
Q2FY11. Margins for the quarter slid significantly by ~578 bps to 5.0%
from 10.8% in Q2FY11. The pressure on margins was on account of
higher raw material costs and employee expenses. Raw material
expenses in Q2FY12 jumped to 58.1% of net sales compared to 52.9% in
the corresponding quarter last year. Employee expenses were higher by
~135 bps and stood at 13.4% during the quarter. In spite of higher sales,
a sharp decline in the EBITDA pulled down the earnings of the company
to | 12.5 crore against | 15.4 crore in Q2FY11. The company reported
other income of | 14.8 crore during the quarter on account of interest
income charged from Henkel India for the loan granted to it by JLL.
ƒ Segmental performance
JLL has reported an increase in sales in soaps & detergents and
homecare segments, by 7.2% to | 97.0 crore and 5.1% to | 57.5
crore, respectively. However, the earnings in both segments
remained subdued. The reported profit before interest and tax (PBIT)
in soaps & detergents stood lower at | 15.7 crore in Q2FY12 from |
16.8 crore in Q2FY11. The homecare segment reported a PBIT loss
of | 6.6 crore in Q2FY12 against a profit of | 4.0 crore in Q2FY11.
V a l u a t i o n
At the CMP, the stock is trading at 20.4x and 19.8x its FY12E and FY13E
EPS of | 7 and | 7.2, respectively. The company has taken price increases
(~7%) across all its SKUs from October, 2011 onwards. They believe this
would help them to ward off the impact of inflationary cost pressures.
However, we remain wary of the volume growth that could be impacted.
With the company’s sales growth remaining moderate and its inability to
maintain margins, we remain cautious on the stock. We value the stock at
19x its FY13E EPS, assigning it a target price of | 136 with a HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M a r g i n s s u f f e r a s i g n i f i c a n t b l o w …
Jyothy Laboratories (JLL) in Q2FY12 reported a moderate growth of 6.8%
in its revenues that stood at | 154.6 crore against | 144.8 crore in
Q2FY11. Margins for the quarter slid significantly by ~578 bps to 5.0%
from 10.8% in Q2FY11. The pressure on margins was on account of
higher raw material costs and employee expenses. Raw material
expenses in Q2FY12 jumped to 58.1% of net sales compared to 52.9% in
the corresponding quarter last year. Employee expenses were higher by
~135 bps and stood at 13.4% during the quarter. In spite of higher sales,
a sharp decline in the EBITDA pulled down the earnings of the company
to | 12.5 crore against | 15.4 crore in Q2FY11. The company reported
other income of | 14.8 crore during the quarter on account of interest
income charged from Henkel India for the loan granted to it by JLL.
ƒ Segmental performance
JLL has reported an increase in sales in soaps & detergents and
homecare segments, by 7.2% to | 97.0 crore and 5.1% to | 57.5
crore, respectively. However, the earnings in both segments
remained subdued. The reported profit before interest and tax (PBIT)
in soaps & detergents stood lower at | 15.7 crore in Q2FY12 from |
16.8 crore in Q2FY11. The homecare segment reported a PBIT loss
of | 6.6 crore in Q2FY12 against a profit of | 4.0 crore in Q2FY11.
V a l u a t i o n
At the CMP, the stock is trading at 20.4x and 19.8x its FY12E and FY13E
EPS of | 7 and | 7.2, respectively. The company has taken price increases
(~7%) across all its SKUs from October, 2011 onwards. They believe this
would help them to ward off the impact of inflationary cost pressures.
However, we remain wary of the volume growth that could be impacted.
With the company’s sales growth remaining moderate and its inability to
maintain margins, we remain cautious on the stock. We value the stock at
19x its FY13E EPS, assigning it a target price of | 136 with a HOLD rating.
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