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- 03 Nov 2021
- ICICIdirect Research
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JYOTHY LABS DISAPPOINTS, PROFIT SLUMPS MORE THAN 30%...
JYOTHYLAB - 384 Change: -14.30 (-3.59 %)News: Jyothy Lab posted a 620 bps contraction in operating margins & 30.6% decline in net profit. Standalone revenue grew 15.7% to Rs. 578.3 crore on the back of strong growth in dish washing on high base & healthy recovery in fabric wash business. The company registered a volume growth of 11.4%. Gross margins contracted by 780 bps due to ultra high raw material price inflation. Advertisement spends increased 100 bps. Cost rationalisation continued with 160 bps & 100 bps savings in employee & overhead spends. Operating profit dipped by 24.5% to Rs. 67.1 crore. Operating margins contracted by 620 bps. PAT witnessed 30.6% de-growth to Rs.42.1 crore. Category wise, dish washing segment & fabric wash segment witnessed growth of 12.7% & 25.2%, respectively. HI (Household insecticide) & Personal care segment saw 4.1% & 5.3% sales growth, respectively. Consumer demand has normalised after the second wave of pandemic & distribution network has also stabilised. The growth in dish washing & HI has been driven by new users.
Views: The company has been able to grow consistently and strongly in dishwashing segment by driving penetration through lower SKUs in rural India. Similarly, personal care & HI has been growing at a moderate pace over the period of time. However, some of the major concerns for the company remain low growth in fabric wash given the penetration levels are very high in the category and low margins (losses currently) in HI category given it is relatively small player in the category. Further, it is difficult for the smaller companies (low gross margins, low ad-spends) to pass on the substantial cost inflation in the current unprecedented inflationary scenario. We believe the company would continue to witness margins pressures for atleast next two quarter with the elevated commodity prices.