Jyothy Labs: Evolving power (brands) play

Initiating Coverage | Sector: Consumer

Jyothy Labs

BSE Sensex

27,438

S&P CNX

8,305

CMP: INR245

TP: INR320 (+31%)

Buy

Evolving power (brands) play

Foundation laid; set for acceleration

Stock Info

Bloomberg

Equity Shares (m)

MCap (INR b)/USD b)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val (INRm)/Vol ‘000

Free float (%)

JYL IN

181.0

44.3/0.7

314/172

-2/-4/5

50/237

33.2

Post its acquisition of Henkel India, JYL has transformed into a meaningful player

in the Home and Personal Care segment, with a USD5b market opportunity.

Hitherto known for its family-driven organization culture, JYL has made several

senior-level recruitments across departments from MNCs in the last 18-24 months.

Softening of raw material prices and operating efficiencies will help drive margin

expansion. We expect JYL to reinvest some of the gains in its power brands, for

which we see strong potential in the next 3-5 years.

We model 17% sales CAGR, 36% EBITDA CAGR and 40% PAT CAGR over FY15-17.

Initiate coverage with a Buy rating.

Financial Snapshot (INR Million)

Y/E March

2015E 2016E 2017E

Net Sales

15,134 17,787 20,778

EBITDA

Adj PAT

EPS (INR)

Gr. (%)

BV/Sh (INR)

RoE (%)

RoCE (%)

P/E (x)

P/BV (x)

EV/EBITDA (x)

1,585 2,449 2,942

986 1,853 1,926

5.4

15.2

42.5

13.1

10.0

45.0

5.8

31.4

10.2

88.0

48.0

22.6

15.5

23.9

5.1

19.9

10.6

3.9

53.6

21.0

17.6

23.0

4.6

16.2

USD5b market opportunity

Traditionally, Jyothy Labs (JYL) was a single product mass market player, with

Ujala

being its key offering. JYL’s complexion has transformed after it acquired

Henkel India -- from being a player operating in only the Home Care segment, it

is now a meaningful player in the Home and Personal Care segment (market

opportunity has multiplied ~5x to USD5b). With the first leg of Henkel India’s

turnaround complete, JYL has a portfolio of power brands (Ujala,

Exo, Pril,

Henko, Maxo

and

Margo)

operating in categories with low penetration and low

per capita consumption.

Building blocks in place

Post Henkel India’s acquisition, JYL adopted a twin approach to improve

profitability, which includes: 1)

Organizational rejig

(refer annexure-1): a)

Induction of professional management (roped in Mr S Raghunandan as CEO; he

is best known for turning around Paras Pharma and Dabur International’s

business), b) lean distribution structure (reduce distributor count to 1,700 from

7,000), c) rationalization of trade margins. 2)

Revamp of product offerings:

Identification of power brands and new product development (launch of new

variants/brand extensions), b) higher brand investments (increased ad spends to

sales ratio to 11-12% v/s 8% over the last five years), c) enhanced product reach.

Shareholding pattern (%)

As on

Promoter

DII

FII

Others

Dec-14 Sep-14 Dec-13

66.8

8.0

15.5

9.8

66.8

9.4

14.1

9.8

66.8

8.4

14.5

10.3

FII includes depository receipts

Stock Performance (1-year)

Softening raw material prices, operating efficiencies to drive margin

expansion

Sharp correction in crude prices from USD110/bbl in June 2014 to USD60/bbl in

March 2015 (LAB and PFAD prices are down 32% YoY and 19% YoY, respectively),

could drive significant gross margin expansion for JYL, as crude and crude

derivatives form ~50% of total input costs. We build gross margin expansion of

70bp for FY15 and 270bp over FY15-17 (refer Exhibit 14; management has

guided 400bp savings due to input cost correction). This coupled with savings

from restructuring initiatives could drive 370bp EBITDA margin expansion over

FY15-17. We expect JYL to selectively use the gains to reinvest in brands, as it

introduces new variants/brand extensions.

24 April 2015

Jyothy Labs

Robust fundamentals; valuations attractive

Post Henkel India’s integration, JYL is well placed to capture the attractive

opportunity its expanded portfolio offers. It now addresses a far bigger market,

with better distribution footprint and capability to invest and scale up brands.

We are also enthused by JYL’s execution track record under Mr S Raghunandan.

Given its increasing brand investments and richer portfolio, we expect strong

potential for its power brands in the next 3-5 years. We model 17% sales CAGR,

36% EBITDA CAGR and 40% PAT CAGR over FY15-17. We initiate coverage with a

Buy

rating and target price of INR320 (21x FY17E EV/EBITDA; three-year

average). We apply EV/EBITDA to value JYL, as reported profits do not reflect the

actual profitability due to capitalization of interest expenses on NCD. Heightened

competition in its core categories due to lower input costs is a key risk.

Exhibit 1: FMCG coverage universe valuation metrics

Price

Company

Consumer

Asian Paints

Britannia

Colgate

Dabur*

Emami*

Godrej Consumer

GSK Consumer

Hind. Unilever

ITC

Jyothy Labs

Marico*

Nestle

Pidilite Inds.

United Spirits

Reco

(INR)

EPS Growth YoY (%)

P/E (x)

EV/EBITDA (x)

RoE (%) Div.

Mkt Cap

FY15E

(USD M) FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E

(%)

11,639

4,023

4,343

7,441

3,461

6,024

4,142

30,254

43,408

715

4,038

10,384

4,511

7,799

16.2 37.4

29.0 32.7

15.7 23.5

15.9 26.3

18.1 28.5

22.2 36.7

-12.8 19.9

5.5 18.0

11.0 10.9

15.2 88.0

18.4 22.9

6.8 20.1

12.9 50.8

LP 151.7

22.7 51.8

25.0 51.1

24.2 48.7

15.5 44.3

22.6 46.3

21.0 42.5

17.6 44.8

18.1 50.1

14.9 28.3

3.9 45.0

21.8 44.7

18.8 52.6

17.2 53.5

43.5 197.0

37.7

38.5

39.4

35.1

36.0

31.1

37.4

42.5

25.5

23.9

36.4

43.8

35.5

78.3

30.7

30.8

31.8

30.4

29.4

25.7

31.8

36.0

22.2

23.0

29.9

36.9

30.3

54.5

34.8

37.2

32.9

35.4

39.2

30.5

33.6

74.5

19.1

31.4

29.3

31.4

35.5

67.6

25.1 20.2

32.5

0.9

27.3 21.3

51.2

0.8

25.2 20.4

89.3

1.5

27.9 23.8

35.7

0.8

29.9 23.8

43.9

0.8

23.0 19.5

20.8

0.6

27.3 22.6

29.9

0.9

61.6 50.5 109.6

1.5

17.3 15.2

35.2

2.1

19.9 16.2

13.1

1.2

23.3 18.9

32.8

0.3

26.2 22.2

48.2

0.9

23.7 20.0

23.7

0.6

46.4 36.1

8.0

0.0

Source: Company, MOSL

Neutral

Buy

Neutral

Buy

Neutral

Buy

Neutral

Buy

772

2,142

2,031

269

970

1,126

6,264

890

347

245

398

6,850

560

3,413

24 April 2015

Jyothy Labs

Addressing a USD5b market opportunity!

Traditionally, Jyothy Labs (JYL) was a single product mass market player with

Ujala

being its key offering. Complexion of JYL has transformed post Henkel

India’s acquisition -- from operating in only the Home Care segment, it now has

a meaningful play in Home and Personal Care segment.

Exhibit 2: Category overview – JYL

Category

Dish wash Bars

Fabric Care

Fabric Whitener

Household

Insecticide

Skin Cleansing

Overall market

Size (INR b) 3-yr CAGR JYL offerings

25.0

22.0

Exo and Pril

Henko, Ujala Detergent Powder,

110.0

15.0

Mr White, Chek

5.2

10.0

Ujala

39.7

130

11.0

8.0

Maxo

Margo

JYL market share (%)

2011

2014

14.1

15.3

2.4

72.0

9.5

1.2

71.5

8.3

2.0

1.2

Source: Industry, Company, MOSL

Exhibit 3: Henkel India’s acquisition complements JYL’s product offerings, provides it with presence in premium segments

Mid-Premium

Detergents

Ujala

Mr. White

Other Fabric Care

Ujala Whitener

Mr White Bleach

Dish Wash

Exo Bar

Pril Bar

Household Insecticides

Maxo Coil

Maxo Liquid

Personal Care

Jeeva

Nikki

Note: Marked in Red are products taken over on Henkel India’s acquisition

Value

Chek

Morelight

Premium

Technobright

Henko Champion

Niche

Technobright Matic

Henko Matic

Ujala Stiff & Shine

Exo Scrubber

Maxo Cream Wet Wipe

Margo

Neem

Source: Company, MOSL

Pril Liquid

Exo Liquid

Fa Deo

Fa Soap

With the first leg of Henkel India’s turnaround complete, JYL has a portfolio of

brands (Ujala,

Exo, Pril, Henko, Maxo

and

Margo)

with value-for-money

positioning, providing a USD5b market opportunity (~5x spike in market

opportunity).

Exhibit 4: Market opportunity increases ~5x post Henkel acquisition

Dishwash Bars

Fabric Care

Fabric Whitener

Household Insecticide

Skin Cleansing

Market opportunity

(USD 5b) - ~5x spike

2.2

0.7

0.1

0.7

0.1

0.4

JYL

1.8

0.4

JYL + Henkel

Source: Company, MOSL

24 April 2015

Jyothy Labs

Power brands to drive next leg of growth

Constitute ~90% of JYL’s revenue

Power brands to the fore:

JYL derives ~90% of its sales from the uniquely positioned

power brands. Innovation, distribution synergies and category expansion form the

cornerstone of its medium term strategy.

Exhibit 5: Power brands constitute ~90% of JYL’s revenue

INR m

Ujala

Maxo

Exo

Henko

Margo

Pril

Others

Total

FY09

2,196

1,380

624

300

4,500

FY10

2,650

1,785

944

368

5,748

FY11

2,998

1,459

1,140

401

5,998

FY12

3,008

1,477

1,633

510

6,628

FY13

FY14

2,800

3,498

1,690

1,997

2,018

2,604

1,039

1,220

834

1,068

684

865

1,109

1,299

10,174

12,551

Source: Company, MOSL

Exhibit 6: JYL brands under the BCG Growth – share matrix

Note: Refer Exhibit 2 for category overview

Source: Industry, Company, MOSL

JYL’s brands fare as following under the BCG growth-share matrix, in our view:

a) Cash Cow:

Ujala

is the mainstay brand for JYL with brand leadership in the Fabric

Whitener segment (70%+ market share), category growth of 10% over the last three

years. It provides JYL with stable cash ROIs which are used for investing in its other

brands.

b) Star:

Exo

and

Pril

in the dishwashing segment are star performers for JYL growing at

24% CAGR over the last three years (~15% market share). We believe the Dishwashing

category could continue to grow in high teens in the medium term, with a gradual shift

happening from conversion at the lower end from proxies to dish wash bars and at the

top end for conversion to liquids from dish wash bars.

c) Question Mark:

Henko

and

Margo

are niche offerings in the premium detergents and

the natural beauty soaps category with ~1% market share. With new product

introductions/brand extensions and increased brand spends, we believe these brands

could post high teens growth in the medium term.

24 April 2015

Jyothy Labs

Dish Wash -

Exo & Pril

(28% of revenue): Capitalizing on premiumization

The Dish Wash segment is INR25b in size and posted 22% CAGR over the last

three years. The category is dominated by dish wash bars, with HUL’s

Vim

being

the leader. JYL’s twin offerings have ~15% market share, with

Exo

focusing on

the Dish Wash Bars segment and

Pril

on the Liquids segment.

Exo

is the challenger brand in the category and focuses on differentiation of its

offering on the ‘anti bacterial’ platform.

Exo

forms 75% of the segment revenue

for JYL (grew 26.3% over FY12-14 and 19% YTDFY15) with

Exo

dish wash bar

offerings extended to the liquid segment and scrubber category (Exo

Safai,

INR2.7b market growing at 15% CAGR).

With the strong brand equity of

Exo

dish wash bar and

Pril

liquids, JYL has an

opportunity to play in both the sub-segments of Dishwashing category

(conversion at the lower end from proxies to dish wash bars and at the top end,

for conversion to liquids from dish wash bars). With the integration of Henkel

India in place, JYL plans to leverage its increased distribution reach and grow the

revenue share for

Exo

from non-South states and

Pril’s

share in tier 2 and tier 3

cities. We expect the segment to clock 20.8% revenue CAGR over FY15E-17E, led

by increased product reach and effective media strategy.

Exhibit 7: Over the last three years, JYL maintained its market share (%), while

Vim

gained share from marginal players

Dishwashing

Hindustan Unilever (Vim)

Jyothy Laboratories

Rohit Surfactants (Xpert)

Ecof Industries (Sabena)

Pitambari Products

Others

2005

49.0

9.2

0.0

9.0

3.5

29.3

2006

48.0

10.5

0.0

10.0

3.5

28.0

2007

47.0

11.2

2.0

10.0

4.0

25.8

2008

46.3

11.2

3.0

10.0

3.0

26.5

2009

46.7

12.3

4.2

9.3

3.2

24.3

2010

47.4

12.9

4.5

8.5

3.3

23.4

2011

52.0

14.1

4.8

7.7

3.3

18.1

2012

59.5

15.5

5.2

6.1

3.2

10.5

2013

60.1

15.7

6.0

4.4

3.0

10.8

2014

60.9

15.3

6.0

4.0

3.0

10.8

Source: Industry, Company, MOSL

Fabric Care -

Henko

(10% of JYL revenue): Extending the reach in premium

Detergent segment

The Fabric Care (Detergents) segment is INR110b in size and clocked 15% CAGR

over the last three years. JYL operates primarily in the premium (20% of the

INR110b category) and mid-premium segments, with

Henko

being the key

offering (well positioned in southern and northern India). JYL also leveraged the

flagship brands equity to launch

Ujala

detergent powder, which currently

operates only in the southern states of India (~20% market share in Kerala).

JYL re-launched

Henko

in Aug’2014 under a new formulation as

Henko

LINTelligent

and has rolled out multiple initiatives to drive its penetration: a)

increased modern trade and CSD visibility, b) drive trial generation with sachets,

c) launched trade engagement schemes and d) attractive consumer offers on

bulk packs (refer Annexure III for comparison of

Henko’s

pricing to its peers). As

per management, the initial response to

Henko’s

re-launch has been positive

and is meeting internal targets; brand posted 29% growth in 3QFY15.

On the back of new product introductions/brand extensions and increased

brand spends, we expect

Henko

to post 22% revenue CAGR over FY15E-17E.

24 April 2015

Jyothy Labs

Fabric Whitener -

Ujala

(28% of JYL revenue): The cash cow

Ujala

is the market leader in the INR5.2b fabric whitener category (~35%

penetration), which is growing at 10% CAGR over the last three years (revenue

market share:

Ujala

- 71.5%, Reckitt

Robin Blue

- 5% and HUL

Rin Perfect Shine

3%).

Ujala

contributes 28% of JYL’s revenue (40% of sales from south India) and a

higher share of its profits, given its superior margin profile (70%+ gross margin).

Over the years,

Ujala

has strengthened its position by acquiring laundry care

and after-wash brands such as a)

More Light

from Modern Chemical India in

May 2007 — third-largest fabric whitener brand (3-4% market share) with

strong distribution in Maharashtra, Uttar Pradesh, Bihar, Gujarat and Odisha

and b)

Ruby Liquid Blue

from Bangalore Detergents and Plastic Company in April

2007 — enabled JYL to enter the economy segment.

Led by higher ad spends (JYL increased its brand investments for

Ujala

effectively communicate the brand's whiteness quotient with new packaging),

and new low unit offering (launched INR1 sachet in regions where it has low

market share), we expect

Ujala

to post 13.5% revenue CAGR over FY15E-17E.

Exhibit 9: ...and 57% in volume terms

Market Share (in volume terms)

60.0

72.6

58.4

71.5

59.0

58.0

58.3

57.3

Exhibit 8:

Ujala

has 70%+ market share in value terms…

Market Share (in value terms)

74.0

73.5

72.0

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY08

FY09

FY10

FY11

FY12

FY13

FY14

Source: Company, MOSL

Household Insecticide -

Maxo

(16% of JYL revenue): A mass brand, trying to

change complexion

JYL has tactically launched

Maxo

liquid refill bottles

which are compatible with

any type of vaporizing

appliance available in the

market

Household Insecticide (HI) is an INR39.7b category growing at 11% CAGR over

the last three years. The category is relatively under-penetrated in India (27%),

compared to other emerging markets such as Sri Lanka (60%) and Bangladesh

(80%). Top four players within the category account for ~90% market share, with

Godrej Consumer’s

Goodknight

being the category leader.

JYL’s

Maxo

has ~8.3% market share in the HI category and enjoys market

leadership in rural India (South and East India) on the back of

Ujala’s

vast

distribution network. Due to low electricity connectivity in rural India, the non-

electrical format still dominates the HI category.

24 April 2015

Jyothy Labs

Exhibit 10:

Maxo

has 15.2% market share in coils segment (~45% of HI category)

Market Share (%)

Coils

Mats

Liquid Vaporiser

Aerosol

Home Insecticides

GCPL

Goodknight

41.0

77.9

47.7

75.0

45.3

Reckitt

Mortein

30.2

9.8

10.2

16.7

21.3

SC Johnson

Jyothy Labs

Others

All Out

Maxo

1.3

15.2

12.3

1.3

0.0

11.0

37.4

4.5

0.2

4.1

0.6

3.6

14.7

8.3

10.4

Source: Industry, Company, MOSL

JYL is employing a two-pronged strategy to improve

Maxo’s

performance and

grow ahead of market: a) cut promotions and trade margins for

Maxo

coils,

(reduced stockist margin to 6% from 8%) and b) grow its share of liquids to 40%

from 25% currently (had high single digit share three years ago, liquids is 3x

more profitable than coils).

JYL plans to launch an LV advanced machine (more automation driven) and a

Fast Card variant in 1HFY16. Led by these initiatives, we believe

Maxo

could post

16.5% revenue CAGR over FY15E-17E (brand clocked 20% growth during

9MFY15).

Skin Cleansing -

Margo

(9% of JYL revenue): Tapping the latent brand equity

Margo

operates in the soaps category, which is INR130b in size and has posted

8% CAGR over the last three years (natural soaps is ~INR20b in size). The brand

has 1.2% market share and a strong presence in West Bengal and South India.

JYL plans a national roll-out of

Margo,

with a strong focus on the neem brand

equity. It also extended its product offering to adjacent categories by launching

Margo

face wash in 2QFY15. Driven by increased brand investments and wider

coverage, we expect

Margo

to post 17% revenue CAGR over FY15E-17E.

operates in the INR20b deodorant category, which posted 40% CAGR over

the last three years. JYL re-launched the brand in smaller pack sizes with a new

campaign in FY14, positioning it as a women’s deo and talc brand. But given the

increasing shift in deodorants category from anti-perspirant to strong

fragrances, JYL lost considerable market share. Currently, JYL has adopted a

cautious stance to hold back further investments in the competitive/fragmented

deodorants category.

Deodorants -

Fa:

Fragmented market; niche creation is a challenge

24 April 2015

Jyothy Labs

Scaling up brands through Adpro investments

JYL traditionally maintained a low advertising and promotion strategy relative to

its FMCG peers, average of 8% ad-spend to sales over the last five years (vs.

11.3% for peers, excluding ITC and Nestle). Going forward to support its existing

offerings and drive the new launch momentum, management has decided to

maintain ad-spends in the 11-12% band (11.9% ad spends to sales during

9MFY15). Also, JYL has shifted its focus to above-the-line advertising which

would aid in building consumer traction and profitability in the medium term.

Change in marketing approach:

Compared to its earlier strategy of ad agencies

managing the marketing function, JYL has now roped in brand managers to

manage individual brands across categories. This focused approach towards

brands could aid in generating incremental RoIs on additional brand spends. JYL

has also roped in celebrities (cine stars and locally relevant brand ambassadors)

to create aspirational value and increase the mind share for its brands.

Exhibit 12: JYL’s ad-spends are the lowest among peers (FY14)

Exhibit 11: JYL is planning to drive Adpro investments in the

11-12% band

Ad Spend (%)

10.8

9.4

9.3

8.0

6.4

5.1

9.0

6.5

8.0

11.8 11.8 11.7

Source: Company, MOSL

Rising contribution from non-South geography

Traditionally, JYL focused on the rural geography and enjoyed a strong presence

in South India, by virtue of its origination there. Post Henkel India acquisition

JYL’s contribution from non-South India has increased to 58% (Henkel India used

to derive 70% revenue from urban India, while JYL got 75% revenue from rural

India). With increased reach and product acceptance for its product portfolio in

the non-South regions, we believe JYL could further increase its contribution to

65% over the next three years.

Exhibit 13: 3/5 of JYL’s revenue is now contributed from non-South regions

South (%)

Non South (%)

FY13

FY14

9MFY15

Source: Company, MOSL

24 April 2015

Jyothy Labs

Sharp correction in raw material prices to drive margin

expansion

Sharp correction in crude prices from USD110/bbl in June 2014 to USD60/bbl in

March 2015 (LAB and PFAD prices are down 32% YoY and 19% YoY resp.), could

drive significant gross margin expansion for JYL as crude and crude derivatives

form ~50% of the total RM cost for JYL. We build in 70bp gross margin

expansion for FY15E and 270bp over FY15E-17E (as per 3QFY15 earnings call,

management has guided for 400bp savings due to input cost correction).

Contrary to its peers, JYL would selectively pass on the input cost correction to

consumers through price cuts/higher discounts in select channels and brands.

We expect JYL to use the gains to invest more in brands, as it introduces new

variants/brand extensions.

Exhibit 14: Sensitivity to crude prices assuming 30% flow through in crude derivative prices

Scenario

Average crude prices (USD/bbl) – FY16

Gross Margin (%) - FY15

Gross Margin expansion: FY15-16 (bps)

Gross Margin (%) - FY16

EPS – FY16

Note: Average crude prices for FY15 is USD87

48.1

7.2

55.3

13.6

48.1

5.5

53.6

12.3

III

48.1

4.7

52.7

11.6

48.1

2.9

51.0

10.2

48.1

1.2

49.3

8.9

Source: Company, MOSL

Exhibit 15: Lab prices declined 32% YoY

150

130

110

89.1

LAB Price by RIL (INR/Kg)

138.1

125.1

115.1

Exhibit 16: PFAD prices down 19% YoY

61,000

98.1

52,000

43,000

34,000

25,000

30,338

50,791

Palm Fatty Acid price (INR/MT)

47,658

48,974

36,540

Source: Company, MOSL

Exhibit 17: Gross margin expansion of 270bp over FY15-17E

51.9

Gross Margin (%)

51.0

48.3

47.0

45.3

44.9

47.1

48.1

50.8

47.3

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15E

FY16E

FY17E

Source: Company, MOSL

24 April 2015

Jyothy Labs

Potential catalyst: Henkel AG option to acquire 26%; Preferential allotment

could aid in NCD prepayment in FY17

Henkel AG has the option to acquire 26% of JYL’s equity share capital through

primary/secondary transaction at a price greater than or equal to the market

price after a period of five years (option period is Apr 2016 to Mar 2017),

subject to mutually agreeable terms and conditions. Given the turnaround of

business under JYL’s management and the opportunity available in nascent-

stage categories in India (dishwashing and household insecticides), we believe

Henkel AG (50% of global revenue from Home Care and Personal Care) would

likely ascribe to acquire 26% stake in JYL through multiple routes.

We believe Henkel’s entry into JYL will provide strong long term strategic

advantage in expanding JYL’s business and portfolio expansion.

Exhibit 18: Henkel AG likely to acquire 26% stake through multiple routes, in our view

Henkel Option

Preferential

Issue/Fresh Allotment

of Shares by JYL

Equity stake dilution by

promoters

Acquisition of shares

through secondary

markets

Source: Company, MOSL

24 April 2015

Jyothy Labs

Robust fundamentals, valuations attractive

Initiating coverage with a Buy rating

JYL to post 17.2% revenue CAGR over FY15E-17E driven by innovation, distribution

synergies and aggressive brand spends.

EBITDA margin expansion of 370bp over FY15E-17E led by benign raw material cost

and mix improvement, in our view.

With moderate capex requirements of INR300m per year and an improving working

capital profile, RoE should improve to 21% (from 13% currently).

We initiate coverage with a Buy rating. Our target price of INR320 implies 31% upside.

Robust fundamentals

JYL has transformed Henkel India’s business and now offers a product portfolio of

well recognized brands. We expect JYL to post 17.2% revenue CAGR over FY15E-17E

driven by innovation, distribution synergies and aggressive brand investments (ad

spends to sales to be in the 11-12% band relative to 8% over the last five years).

Sharp correction in crude prices also augurs well for JYL’s gross margin as ~50% of

the raw material basket is crude or crude derivative (we build in 70bp gross margin

expansion for FY15E and 270bp over FY15E-17E). Contrary to its peers, JYL would

selectively pass on the input cost correction to consumers through price cuts/higher

discounts in select channels and brands. Input cost savings coupled with savings

from restructuring initiatives could drive EBITDA margin expansion of 370bp over

FY15E-17E, in our view. Interest (proceeds raised through NCD and preference

capital issued to promoters) and tax savings (on account of Henkel India’s

acquisition) would further drive PAT CAGR to 40% over FY15E-17E, in our view (we

adjust the premium payable on NCD in P&L instead of balance sheet).

Expect 17.2% revenue CAGR over FY15E-17E:

Driven by robust performance of

its power brands and incremental growth from new product launches and

distribution expansion, we expect JYL to post 17.2% revenue CAGR over

FY15-17E.

Exhibit 19: Revenue to post 17.2% CAGR over FY15E-17E…

Revenue (INR b)

47.3

15.7

21.0

19.4

14.8

17.5

16.8

(21.2)

Revenue growth (%)

Exhibit 20: …while EBITDA to grow at 36%

EBITDA (INRb)

52.9

EBITDA Growth (%)

54.5

18.4

4.5

20.1

3.6

FY11

FY12

FY13

FY14

FY15E

FY16E

FY17E

FY11

FY12

FY13

FY14

FY15E

FY16E

FY17E

Source: Company, MOSL

EBITDA margin to expand by 370bp over FY15E-17E:

JYL’s operating margin

expanded 230bp over FY12-14 led by consolidation of operations and improved

sourcing mechanism (long term purchase contracts in lean season to ensure

best average purchase price for the year, shift from conventional negotiation to

cost plus model for packing materials, combined strategy of spot and forward

24 April 2015

Jyothy Labs

booking for highly fluctuating raw materials). With the sharp correction in raw

material prices (crude and crude derivatives form ~50% of input costs) and

improvement in product mix (higher growth in better margin products namely

Pril, Exo, Ujala Supreme, Maxo Liquid),

we expect EBITDA margin to expand

370bp over FY15E-17E to 14.2%. We note management has guided for EBITDA

margin and ad spends to be cumulatively ~25% plus.

Exhibit 21: EBITDA margin to expand 370bp over FY15E-17E, primarily led by RM softening

16.1

13.4

11.7

9.2

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15E

FY16E

FY17E

11.6

11.5

10.5

15.4

EBITDA Margin (%)

13.8

14.2

Source: Company, MOSL

Adjusted PAT to post 40% CAGR over FY15-17E:

JYL had taken an INR4.3b debt

to fund the Henkel India acquisition which was subsequently replaced with a

three-year zero coupon NCD, with interest payable on redemption. This has

resulted in savings of ~100bp on the existing term loan from banks (effective

rate of interest of 10.7%). Besides this, JYL’s promoters had infused INR2.6b (at

INR175/share) through a preferential allotment during December 2013. Thus

operating margin expansion coupled with savings in reported interest cost (we

adjust the premium payable on NCD in P&L instead of balance sheet) and tax

savings on account of Henkel India’s acquisition, we expect PAT to post 40%

CAGR over FY15E-17E.

Exhibit 22: Debt reduction by equity infusion and raising NCD Exhibit 23: Debt rose post Henkel India’s acquisition; JYL

(INR m)

raised funds via preferential allotment in FY14

4QFY13 1QFY14 2QFY14 3QFY14 4QFY14

Term Loan from Banks

4,300 4,130 3,960

WC @ 11.5%

620

580 1,040

Short Term loan

200

500

Commercial Paper

650

NCD @10.25%

500

NCD @9.65%

650

Zero Coupon NCD@ 11%

- 4,000 4,000

Excess Cash

- (1,030) (1,150)

Total

6,070 5,860 6,350 4,620 4,000

Source: Company, MOSL

Net Debt/Equity

0.8

0.9

0.6

(0.3)

(0.5)

(0.3)

(0.4)

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14

Source: Company, MOSL

Significant improvement in FCF:

Strong growth in PAT coupled with marginal

savings in working capital and limited capex requirement (our estimate is

INR300m per year) could drive FCF generation over the next two years (3x over

FY15-FY17E). However the dividend payout ratio could come off to 50%

(management guidance) as JYL accumulates cash reserves for bullet repayment

in FY17.

24 April 2015

Jyothy Labs

Exhibit 24: FCF to grow by 3x in FY17E

FCF (INR m)

209

-99

-868

642

1,833

2,072

Exhibit 25: Payout to be approx. 50% over FY14-17E

Dividend Payout (%)

FY11

-7,133

FY12

FY13

FY14

FY15E

FY16E

FY17E

FY11

FY12

FY13

FY14

FY15E

FY16E

FY17E

Source: Company, MOSL

Margin expansion to drive improvement in return ratios:

Sharp correction in

raw material costs and mix improvement could drive 370bp EBITDA margin

expansion over FY15E-17E. Our expectation of 40% adj. PAT CAGR coupled with

moderate capex requirements (INR300m) and marginal working capital savings

could drive RoE from 13% in FY15 to 21% in FY17E.

Exhibit 26: Return ratios to improve over FY15E-17E

26.0

19.7

14.5

14.6

11.4

20.1

15.1

8.8

12.8

9.4

6.2

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15E

FY16E

FY17E

9.2

10.5

10.0

12.5

13.1

15.5

17.6

RoE (%)

ROCE (%)

22.6

21.0

Source: Company, MOSL

Building blocks in place

Post Henkel India’s integration, JYL is well placed to capture the attractive

opportunity its expanded portfolio offers. It now addresses a far bigger market

size (USD5b market opportunity), with a better distribution footprint and

capability to invest and scale up its brands.

We are also enthused by the execution track record of JYL under Mr S

Raghunandan. As JYL ups the ante on brand investments and drives a richer

portfolio mix, we expect strong potential for its power brands in the next three

to five years.

We initiate coverage with a

Buy

rating and a 12-month forward target price of

INR320 (21x FY17E EV/EBITDA, 3 year average). We apply EV/EBITDA metric to

value JYL as reported profits do not reflect the actual profitability due to

capitalization of interest expenses on NCD.

Heightened competition in its core categories due to lower input costs is a key

risk in our view.

24 April 2015

Jyothy Labs

Exhibit 27: JYL EV/EBITDA

3.2

21.6

19.1

EV/EBDITA(x)

Peak(x)

Avg(x)

Median(x)

Min(x)

20.2

Source: Company, MOSL

Exhibit 28: FMCG coverage universe valuation metrics

Price

Company

Consumer

Asian Paints

Britannia

Colgate

Dabur*

Emami*

Godrej Consumer

GSK Consumer

Hind. Unilever

ITC

Jyothy Labs

Marico*

Nestle

Pidilite Inds.

United Spirits

Reco

(INR)

EPS Growth YoY (%)

P/E (x)

EV/EBITDA (x)

RoE (%) Div.

Mkt Cap

FY15E

(USD M) FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E

(%)

11,639

4,023

4,343

7,441

3,461

6,024

4,142

30,254

43,408

715

4,038

10,384

4,511

7,799

16.2 37.4

29.0 32.7

15.7 23.5

15.9 26.3

18.1 28.5

22.2 36.7

-12.8 19.9

5.5 18.0

11.0 10.9

15.2 88.0

18.4 22.9

6.8 20.1

12.9 50.8

LP 151.7

22.7 51.8

25.0 51.1

24.2 48.7

15.5 44.3

22.6 46.3

21.0 42.5

17.6 44.8

18.1 50.1

14.9 28.3

3.9 45.0

21.8 44.7

18.8 52.6

17.2 53.5

43.5 197.0

37.7

38.5

39.4

35.1

36.0

31.1

37.4

42.5

25.5

23.9

36.4

43.8

35.5

78.3

30.7

30.8

31.8

30.4

29.4

25.7

31.8

36.0

22.2

23.0

29.9

36.9

30.3

54.5

34.8

37.2

32.9

35.4

39.2

30.5

33.6

74.5

19.1

31.4

29.3

31.4

35.5

67.6

25.1 20.2

32.5

0.9

27.3 21.3

51.2

0.8

25.2 20.4

89.3

1.5

27.9 23.8

35.7

0.8

29.9 23.8

43.9

0.8

23.0 19.5

20.8

0.6

27.3 22.6

29.9

0.9

61.6 50.5 109.6

1.5

17.3 15.2

35.2

2.1

19.9 16.2

13.1

1.2

23.3 18.9

32.8

0.3

26.2 22.2

48.2

0.9

23.7 20.0

23.7

0.6

46.4 36.1

8.0

0.0

Source: Company, MOSL

Neutral

Buy

Neutral

Buy

Neutral

Buy

Neutral

Buy

772

2,142

2,031

269

970

1,126

6,264

890

347

245

398

6,850

560

3,413

24 April 2015

Jyothy Labs

Annexure I - Building capability, professionalizing set-up

Hiring talent with right capability:

Mr S Raghunandan, best known for turning

around Paras Pharma (2x revenue in three years) and Dabur International

Business joined Jyothy Labs as CEO in 2012. He has been entrusted with the

responsibility to realign Jyothy’s business model and set the strategy for the

next leg of growth. Hitherto known for its family-driven organization culture, JYL

has recruited several senior level talent across departments from MNCs over the

last 18-24 months. We believe this is a crucial step and underscores the

management’s intent to professionalize the set-up, as it embarks on its medium

term growth strategy.

Exhibit 29: Mr S Raghunandan – Industry veteran with experience across leading FMCG

companies

Year

1992-2001

2003-2006

April 2006 - May 2008

June 2008 - August 2011

August 2011 - December 2011

January 2012

May 2012 - Till date

Designation

Regional Sales Manager at Hindustan Unilever

Executive Vice-President Sales, Dabur

CEO, Dabur International

Managing Director, Paras Pharma

Global category Marketing Director, Reckitt Benckiser

Managing Director, Reckitt Benckiser

CEO, Jyothy Labs

Source: Company, MOSL

Consignment sales agent

model:

Under CSA model,

JYL used to give one-month

credit to agents.

C&F model:

Stockists can

now take delivery of goods

only after payment, which

will aid in better inventory

management for JYL.

Revamp of sales and distribution structure:

JYL has rationalized the number of

distributors to 1,700 from 7,000 earlier, with distributors now selling its entire

product offerings. JYL has also shifted to C&F distribution model, from its earlier

commercial sales agent model, with top 20% of the key outlets being serviced

directly by company’s sales force, while the rest being served by distributor

sales person. The company has also invested significant amount in IT systems

and brought about automation of secondary sales and order booking. Alongside,

JYL has put in place a new sales structure with zonal sales managers (seven

zones) responsible for the management of various channels (general trade,

modern trade and CSD).

Rationalization of trade margin:

With the integration of Henkel India’s portfolio,

JYL has better bargaining power with its suppliers as it now provides a portfolio

of brands. Thus it has rationalized the trade channels’ margin, thereby resulting

in ~400bp annual savings.

Exhibit 30: Channel margins (%) are rationalized to match industry standards

Brand

Ujala

Exo

Maxo

Maya

More Light

Industry

Stockist Margin

Old

Revised

6-8

6-11

4-5

Retailer Margin

Old

Revised

10-14

8-15

8-10

10-20

10-15

10-14

8-10

Source: Company, MOSL

24 April 2015

Jyothy Labs

Henkel India used to source

its

LAB

requirements

exclusively from Tamilnadu

Petro Products (JV partner

for Henkel AG). Post Henkel

India’s integration, JYL

terminated this contract

and sources its raw

materials at more favorable

rates from its existing

suppliers

Consolidation of manufacturing facilities:

Post Henkel India’s integration, JYL

has implemented standardization and reorganization of its machinery across

locations. JYL has also closed certain facilities (Bhubaneshwar and Chennai) and

is employing a judicious mix of manufacturing by low cost contract

manufacturers or at its tax free facilities. JYL has also created a R&D lab in

Mumbai which will aid in new product development, validation for new

technologies and competition benchmarking of its offerings.

Gross margin savings:

JYL has employed centralized demand forecasting which

enables it in sourcing raw material at favorable prices. It uses the simple cost

plus model for pricing its product offerings and has implemented a request for

quotation format wherein suppliers bid to supply specific raw materials. Also,

JYL employs certain strategies to procure raw material at favorable prices such

as: a) long term purchase contracts for lean season to ensure best average price

for the year, b) e-auction for bulk commodities and secondary packaging items

and c) shift from conventional negotiation to cost plus model for packing

materials.

With the integration of JYL and Henkel India in place, low hanging fruits have

been plucked. However, the next phase of benefits -- revenue growth and cost

savings from these initiatives will reflect in JYL’s performance in the medium

term, in our view.

24 April 2015

Jyothy Labs

Annexure II – Jyothy Labs – a backgrounder

Jyothy Labs was founded in 1983 by Mr M P Ramachandran in Thrissur, Kerala.

Traditionally a single product company (Ujala

Supreme),

JYL has grown to be a multi-

brand, multi-category player, with operations all over India.

Exhibit 31: Key events – JYL, since inception in 1983

Timeline

1983

1984

1987

1995

1997

2000

2001

2002

2005

2007

2008

2009

2011

2012

Details

Mr M.P.Ramachandran started Jyothy Labs as proprietary concern in Kerala by launching Ujala

Ujala sold house to house through team of six sales people in Thrissur and Malappuram districts of Kerala

Commences formal distribution system and ventures out of Kerala into neighboring Tamil Nadu

Launches Nebula, an oil based antibacterial washing soap in Kerala

Launches Ujala pan India

Launches Maxo (mosquito repellant) in West Bengal and Exo in Karnataka, Tamil Nadu and Andhra Pradesh

Launches Maya incense sticks in selected states

Launches Jeeva Ayurvedic Soap

Launches Exo Liquid and Ujala Stiff & Shine in South India

Enters into a deed of assignment of trademark and copyrights for More and Ruby brands

Launches Ujala Stiff & Shine all over India

Foray into service sector through Jyothy Fabricare Services Ltd

Amalgamation of subsidiary Sri Sai Home Care Products Pvt. Ltd

Acquired 14.9% shares of Henkel India Ltd

Acquired 50.97% shares from Henkel India Ltd in May

Source: Company, MOSL

Exhibit 32: Details of board of directors

Name

M P Ramachandran

Ullas Kamath

Designation

Chairman & Managing Director

Joint Managing Director & CFO

Description

Founder of Jyothy Labs and has over 37 years experience in sales, production and

general management.

He spearheaded the acquisition of Henkel India and is responsible for successful

setting of Fabric Spa. Under his leadership the company has diversified and

become a multi product FMCG company.

He joined JYL in May 2012 and has vast industry experience in areas of sales,

marketing and strategic and tactical planning. Previously worked with Paras

Pharma, Dabur and Hindustan Unilever.

She contributes significantly to the sales, marketing and brand communication

function of Jyothy Labs.

Veteran in the field of private equity and mergers and acquisitions. Previously he

was the Managing Partner of Aureos Capital.

He has more than four decades of experience in the field of Commercial Banking,

Treasury Management, Capital Markets and Mutual Funds.

Currently he serves on the Board of various companies and Jyothy Labs benefits

from his experience with leading FMCG players.

He has worked with leading FMCG conglomerates across product categories and

held eminent positions with top notch advertisement companies in India.

Source: Company, MOSL

S. Raghunandan

M. R. Jyothy

Nilesh Mehta

K. P. Padmakumar

Bipin Shah

R. Lakshminarayanan

Whole Time Director & CEO

Executive Director

Independent Director

24 April 2015

Jyothy Labs

Annexure III – Pricing dynamics -

Henko

and

Exo

New

Henko LINTelligent

Strong digital and in-store

promotions

Exhibit 33:

Henko’s

pricing is similar to its competitor offerings in the premium Detergent

segment

Fabric Care

Powder

Wheel Active Lemon & Jasmine

Ujala

Rin

Mr White

Tide Plus

Rin Matic

Ujala Techno Bright

Surf Excel Easy Wash

Henko Stain Champion

Ariel Complete/Oxyblue

Surf Excel Quick wash

Henko Lintelligent Wonder Wash

Ariel 24Hour

Henko Lintelligent Top Load

Henko Lintelligent Front Load

Ariel Complete Matic Front & Top Load

Surf Excel Matic Front Load

1kg

5kg

1kg

500gm

1.5kg

1kg

2kg

1kg

2kg

1kg

44.0

74.0

75.0

425.0

96.0

115.0

60.0

187.0

130.0

185.0

199.0

399.0

205.0

440.0

230.0

44.0

74.0

75.0

85.0

96.0

115.0

120.0

125.0

130.0

185.0

199.0

199.5

205.0

220.0

230.0

SKU

Price (INR)

Price/1kg

Source: Company, MOSL

Exo

is the challenger brand in the Dishwash category and has effectively

differentiated by positioning itself on the anti-bacterial property and usage of the

ingredient ‘Trichlozene’ to reinforce the germ fighting positioning.

Exhibit 34:

Exo

dish wash bars are priced at a premium, despite

Vim

being the category

leader

Category

Dish wash Bar

Vim

Exo Dish Shine Round

Pril

Xpert

Pitambari

Dish wash Liquid

Vim

Exo

Pril

500ml

250ml

425ml

117.0

45.0

105.0

98.0

23.4

18.0

24.7

24.5

Source: Company, MOSL

200gm

250gm

400gm

95gm

400gm

17.0

25.0

30.0

5.0

25.0

8.5

10.0

7.5

5.3

6.3

SKU

Price (INR)

Price/100gm

Dettol

400ml

Note:

Sabena

dish wash powder is available at INR3 for 100g

24 April 2015

Jyothy Labs

Annexure IV – Henkel India acquisition

Exhibit 35: JYL took over Henkel India’s brands with sales of INR4b in 2012

Brand

Henko

Champion

Mr. White

Chek

Margo

Neem

Pril

Category

Fabric Care

Personal Care

Surface Cleaners

Personal Care

Size

(INR m)

1,400

550

200

800

100

700

250

Category

Detergent

Soaps

Toothpaste

Dishwashing

Deodorants

5% market share

1.2% of the overall soaps market

Market Share (by Value)

5.1% of the premium segment

(1.1% of overall detergent market)

Structure

Trademarks for India, Bangladesh and Sri Lanka

Indian Brands Global rights

On License basis @ 2% royalty on net sales

Source: Company, MOSL

Exhibit 36: Purchase consideration paid by JYL for Henkel India

Mode of Acquisition

TPL (Tamilnadu Petrochemicals)

Henkel AG

Open Market

Open Offer

Total Equity cost

Other Transaction cost

Preference capital

Loan repayment

Total Acquisition cost

JYL issued 1 share for 8 shares of Henkel India

% stake

16.66

50.97

3.97

12.05

83.65

Amount Paid

Average Price

(INR m)

(INR)

679

40.8

1,430

28.1

189

47.6

578

48.0

2,876

34.4

279

426

4,250

7,831

557

34.1

Source: Company, MOSL

83.65

16.35

Exhibit 37: Goodwill created on Henkel India’s acquisition to be amortized over 10 years

Particulars

Tangible fixed assets

Intangible assets (brands)

Deferred tax assets

Loans and advances

Other assets

Inventories

Trade receivables

Cash and bank balances

Total Assets

Borrowings

Trade payables

Other liabilities

Provisions

Total Liabilities

Net Assets

Investment in Jyothy Consumer Products Ltd

Purchase consideration

Total

Goodwill

INR m

751

3,037

153

132

339

365

4,820

1,420

518

178

2,122

2,698

3,581

550

4,132

1,434

Source: Company, MOSL

24 April 2015

Jyothy Labs

Annexure V - Henkel AG – a backgrounder

Henkel & Co KGaA AG is a 140-year-old company based out of Germany, with

revenues in excess of Euro 16.4b and operates primarily in three segments:

Laundry & Home Care (28% of revenue):

The Laundry business consists of heavy

duty and specialty detergents, fabric softeners, laundry performance enhancers

and laundry care products. The Home Care business consists of hand-

dishwashing and machine-dishwashing products, cleaners for bath and water

closets applications.

Cosmetics/Toiletries (22% of revenue):

The segment includes hair cosmetics,

body care, skin care and oral care products.

Adhesive Technologies (49% of revenue):

This includes adhesives for

consumers, craftsmen and building and industrial adhesives.

Exhibit 38: Henkel AG primarily operates in three categories

Businesses

Consumer Business

Laundry & Home Care

Beauty Care

Industrial Business

Adhesive Technologies

Brands

Persil, Purex, Pril

Schwarzkopf, Syoss, Dial

Loctite, Teroson, Technomelt

Source: Company, MOSL

Exhibit 39: Revenue breakup by segments

Business Units (Euros m)

Laundry & Home Care

Beauty Care

Total Adhesive Technologies

Adhesives for Consumers, Craftsmen and Building

Industrial Adhesives

Corporate

Total

2014

4,626

3,547

8,127

1,858

6,269

128

16,428

% of Total

28.2

21.6

49.5

11.3

38.2

0.8

2013

4,580

3,510

8,117

1,924

6,193

148

16,355

% of Total

28.0

21.5

49.6

11.8

37.9

0.9

2012

4,556

3,542

8,256

1,988

6,268

155

% of Total

27.6

21.5

50.0

12.0

38.0

0.9

16,509

Source: Company, MOSL

Exhibit 40: Revenue breakup by region

Regions

Western Europe

Eastern Europe

Africa/Middle East

North America

Latin America

Asia-Pacific

Total of all Regions

Corporate

Total

2014

5,724

2,854

1,133

2,884

1,029

2,676

16,300

128

16,428

% of Total

34.8

17.4

6.9

17.6

6.3

16.3

99.2

0.8

2013

5,580

3,034

1,080

2,928

1,061

2,524

16,207

148

16,355

% of Total

34.1

18.6

6.6

17.9

6.5

15.4

99.1

0.9

2012

5,610

2,986

1,077

3,023

1,062

2,597

16,355

155

% of Total

34.0

18.1

6.5

18.3

6.4

15.7

99.1

0.9

16,509

Source: Company, MOSL

24 April 2015

Jyothy Labs

Financials and valuations

Consolidated - Income Statement

Y/E March

Total Income from Operations

Change (%)

Total Expenditure

% of Sales

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income

PBT bef. EO Exp.

EO Items

PBT after EO Exp.

Current Tax

Less: Mionrity Interest

Reported PAT

Adjusted PAT

Change (%)

Margin (%)

FY10

5,982

64.6

5,063

84.6

919

15.4

124

795

178

956

958

217

744

739

93.1

12.4

FY11

6,195

3.6

5,471

88.3

724

11.7

130

594

238

812

818

161

688

651

-11.9

10.5

FY12

9,127

47.3

8,289

90.8

838

9.2

247

591

238

231

584

199

446

385

-40.9

4.2

FY13

11,042

21.0

9,760

88.4

1,281

11.6

224

1,057

682

442

-430

-149

197

591

53.6

5.4

FY14

13,184

19.4

11,667

88.5

1,517

11.5

243

1,274

553

136

858

-43

815

814

856

44.8

6.5

FY15E

15,134

14.8

13,548

89.5

1,585

10.5

314

1,271

440

154

986

987

986

15.2

6.5

FY16E

17,787

17.5

15,338

86.2

2,449

13.8

333

2,116

440

177

1,853

1,854

1,853

88.0

10.4

(INR Million)

FY17E

20,778

16.8

17,836

85.8

2,942

14.2

353

2,589

440

204

2,353

426

1,928

1,926

3.9

9.3

Consolidated - Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Minority Interest

Deferred Liabilities

Total Loans

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Capital WIP

Total Investments

Curr. Assets, Loans&Adv.

Inventory

Account Receivables

Cash and Bank Balance

Loans and Advances & Others

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

E: MOSL Estimates

FY10

3,805

3,878

178

130

4,191

2,930

594

2,336

3,016

730

707

1,224

355

1,203

304

437

462

1,813

4,191

FY11

6,230

6,310

163

691

7,169

3,100

709

2,391

202

622

5,106

694

1,053

2,809

549

1,151

231

360

560

3,955

7,170

FY12

6,044

6,125

161

5,660

12,013

11,743

1,440

10,303

145

3,730

1,220

807

681

1,022

2,181

729

1,083

370

1,549

12,012

FY13

161

6,224

6,386

6,277

12,721

12,407

1,783

10,624

194

4,349

1,722

804

478

1,346

2,460

719

872

869

1,889

12,721

FY14

181

7,163

7,344

6,781

14,152

12,960

2,019

10,941

160

610

4,825

1,738

668

706

1,712

2,383

622

920

841

2,442

14,152

FY15E

181

7,514

7,695

6,633

14,356

13,210

2,334

10,877

350

6,018

1,967

832

824

2,394

2,979

757

1,058

1,165

3,039

14,356

FY16E

181

8,500

8,681

6,485

15,194

13,460

2,667

10,793

350

7,433

2,490

996

1,641

2,306

3,472

889

1,216

1,366

3,961

15,194

(INR Million)

FY17E

181

9,517

9,698

6,937

16,663

13,710

3,020

10,690

350

9,761

2,743

1,101

3,255

2,662

4,228

1,018

1,468

1,742

5,533

16,663

24 April 2015

Jyothy Labs

Financials and valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

Return Ratios (%)

RoE

RoCE

Working Capital Ratios

Inventory (Days)

Debtor (Days)

Creditor (Days)

Working Cap. Turnover (Days)

Leverage Ratio

Debt/Equity

FY10

5.1

5.9

53.4

2.0

45.8

FY11

4.0

4.8

78.3

2.5

72.0

FY12

2.4

3.9

76.0

1.2

60.9

FY13

3.6

4.9

39.6

2.5

82.2

FY14

4.7

6.1

40.6

3.0

74.3

51.8

40.4

6.0

3.8

32.8

1.2

20.1

26.0

44.6

43.2

35.0

36.0

0.0

12.8

15.1

40.9

62.1

26.3

67.5

0.1

6.2

8.8

48.8

32.3

52.9

34.7

0.9

9.4

9.2

56.9

26.6

44.9

46.7

1.0

12.5

10.5

48.1

18.5

32.7

48.0

0.9

FY15E

5.4

7.2

42.5

3.0

64.4

45.0

34.1

5.8

3.3

31.4

1.2

13.1

10.0

47.5

20.1

35.1

53.4

0.9

FY16E

10.2

12.1

48.0

4.1

46.9

23.9

20.3

5.1

2.7

19.9

1.7

22.6

15.5

51.1

20.4

37.2

47.6

0.7

FY17E

10.6

12.6

53.6

4.3

47.3

23.0

19.5

4.6

2.3

16.2

1.8

21.0

17.6

48.2

19.3

36.3

40.0

0.7

Consolidated - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

(Inc)/Dec in WC

CF from Operations

(Inc)/Dec in FA

(Pur)/Sale of Investments

Issue of Shares

(Inc)/Dec in Debt

Others

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

E: MOSL Estimates

FY10

744

124

-144

797

-387

125

-208

204

1,018

1,222

FY11

688

130

-557

246

-345

-622

2,214

560

-1

2,305

1,584

1,222

2,806

FY12

446

247

278

969

-8,102

607

-33

4,969

-302

4,400

-2,126

2,806

680

FY13

197

224

-543

-274

-594

190

617

341

664

-205

680

475

FY14

814

243

-324

736

-527

-595

779

504

-33

615

229

475

704

FY15E

987

314

-479

822

-180

260

-600

454

-781

120

704

824

FY16E

1,854

333

-105

2,083

-250

501

-648

-1,016

817

824

1,641

(INR Million)

FY17E

1,928

353

2,322

-250

501

-48

-459

1,614

1,641

3,255

24 April 2015

Jyothy Labs

NOTES

24 April 2015

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