Q&A #Thread 20

#JyothyLabs #Stock Brief #Analysis

Q->Hey, could you please screen Jyothy Labs and share your POV :)

Me->Please do refer Annual Reports for company progress, plans & other details. Just presenting brief facts & financial check.

1n

Me->Jyothy Labs is Indian-centric company with only 2.8% Revenue from Exports

Major Segment & Brands -

Fabric Whitener (Ujala)
Insect Repellent(Maxo, Laxo LV)
Dish Washer Detergent (Prill, Exo Bar)
Laundry Detergent (Henko)
Personal Care (Margo)

2n

Fabric Whitener(Ujala) has 80% market share & contributes 40.2% of Revenue

Private Labels from Reliance, Big bazaar etc has created little pressure.

Volume de-growth (-22.1%) much worse than Peers.

It spends 9.06% of its revenue on Ad much higher than Dabur & GCPL.

3n

Last 3-5 yrs

Poor Revenue Growth

Medicore ROCE

ROE Ok

Operating Profit has been stagnant to lower

5yr Avg NPM (9.54%) is much lower than peers

5y Avg OPM (14.14%) lower than peers

If I Exclude Other Income than OPM has been around 14.5%. Stable but no-improvement !

4n

Seems like company might have enough competition & may not have enough pricing power.

Has not created wealth for long term investor.

Last 5yrs-> Under-performed Sensex, in-fact -ive returns

Last 10yrs -> Under-perfomed Sensex

5n

Steady Debtor Days

Efficient Cash Conversion Cycle but compared to peers it still lag by a good margin

Manages Cash flow pretty well but still lags its peers

Reduced Debt by more than half in last 3 years

Good Interest Coverage Ratio

6n

PE terms its little cheaper than its Industry but lot cheaper than its 5Yr Historical PE Avg

Cheaper than its Peers in Price to Sales & PE terms too

PE < 10 yr Median PE
P/BV < 10yr Median P/BV

PE < 5yr Median PE
P/BV < 5yr Median P/BV

7n

Promoter pledge is now 8.53% which was 26% Last yr. In Sep 2019 revoked most of their pledge which seems like good sign but at the same time they also reduced their holdings by (-4.02%).

Did they sell their shares in market & used that money to revoke their shares?

8n

OR Bank sold some pledge shares ?
This is serious & you need to dig in here little

Stock Dilution (26.5%) in last 9yrs. It bites retail shareholders. Imagine holding it's shares & 21% of your dividends were given away to others

Current Ratio is low ; improved in last 5 yrs

9n

Free cash flow, EPS has grown well in last 5 yrs

Conclusion -

Quality & Profitability is Good

Valuation is Attractive

Pays good Dividend

No Solvency Issue

Poor Sales growth, Sharp Volume Contraction & -ive Financial Trend (which is probably why stock price is down).

10n

@Suniljoshi94212. I posted this thread on Jyothy lab.