Jyothy Labs Q4FY20: Financial Results & Highlights

Jyothy Labs Q4FY20
Financial Results & Highlights

Introduction
Jyothy Laboratories Ltd is a Mumbai-based fast-moving consumer goods company founded in 1983. It
has 6 business divisions namely Fabric Care (Ujala -. market leader), Household Insecticide (Maxo),
Utensil Cleaners (Exo), Fragrances, Personal Care (Margo) and Fabric Care Service. Ujala, Maxo, Exo,
Jeeva and Maya are some of the brands it owns under these divisions. The company is the largest
player in the fabric whitener space in India with a market share of 72%.
Standalone Financials (In Crs)

Q4FY20 Q4FY19 YoY % Q3FY20 QoQ % FY20 FY19 YoY%
Sales 387 516 -25.00% 413 -6.30% 1685 1797 -6.23%
PBT 20 71 -71.83% 44 -54.55% 166 228 -27.19%
PAT 26* 67 -61.19% 43 -39.53% 158 193 -18.13%
Consolidated Financials (In Crs)
Q4FY20 Q4FY19 YoY % Q3FY20 QoQ % FY20 FY19 YoY%
Sales 398 528 -24.62% 426 -6.57% 1731 1841 -5.98%
PBT 23 74 -68.92% 49 -53.06% 182 243 -25.10%
PAT 27** 67 -59.70% 45 -40.00% 163 198 -17.68%
*Contains tax credit of Rs 6.4 Cr
**Contains tax credit of Rs 3.4 Cr
Detailed Results:
1. Standalone and Consolidated quarterly revenues were down 25% (volume down by 22.1%)
2. The gross margin for the quarter improved slightly from 45.2% last year to 45.7%.
3. Operating EBITDA at 10.3% (Rs 40.6 Cr) Vs 15.8% (Rs 81.3 Cr) in the same period last year.
4. PAT at Rs 26.6 cr as against Rs 66.8 cr, down by 59.7%.
5. FY20 numbers were as follows.
1. Revenues decline of 6% YoY (volumes down by 4.4%).
2. Operating EBITDA at 14.7% (Rs 251.1 Cr) Vs 15.5% (Rs 281.8 Cr) in the same period last
year.
3. PAT at Rs 136 cr as against Rs 130.8 cr, up by 4%.
6. The sales decline in 2020 so far was exacerbated by the loss of sales in late March which is time
for good sales for insect repellants.
7. The impact of COVID on sales was estimated to be Rs 150 Cr and Rs 50 Cr of pre-tax profit.
8. Despite volumes being muted in almost all categories, market share across all brands continue to
remain intact.
9. Category wise break-up of FY20 Revenue Growth:
1. Fabric Care: down 3%
2. Dishwashing: down 3.5%
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3. Household Insecticides: down 19.1%
4. Personal Care: down 6%
5. Laundry Services: up 2.5%
10. The company launched Margo’s hand wash and hand sanitizer post COVID.
Investor Conference Call highlights:
1. The company back to 80% of pre-COVID production levels currently.

2. The company has launched a mobile app called DISTIMAN which is used to facilitate direct orders
from retailers to distributors.
3. The company has also partnered up with Jumbotail, Udaan, Dunzo, Zomato, and Swiggy for
alternate distribution and direct reach to customers.
4. The company is seeing demand growth in low unit packs of Rs 5 and Rs 10 across all brands. Thus
it has ramped up manufacturing and distribution of these products.
5. The company is maintaining a strict business regime and providing no additional credit and is
focusing on secondary sales.
6. The biggest impact of the lockdown was on the household insecticides and personal care
segments.
7. The category wise business share is:
o Fabric Care: 40%
o Dishwash: 30%
o Household insecticides: 16%
o Personal Care: 8%
8. The company sponsored the regional KBC in Kerala to enhance the visibility of Henko in the state.
9. The management does not expect any production-related issues to persist going forward.
10. The company expects good growth going forward due to the renewed focus on healthcare and
hygiene and the fact that 85% of the company’s portfolio is related to health and hygiene.
11. The management expects FY21 EBITDA margins to be around 15-16% on account of low oil prices
which accounts for 40-50% of the company’s RM costs.
12. The company has been very fast to return to manufacturing as most of the workforce for them is
local and their factories have all been located out of the red zones. Thus the company was able to
come back quickly.
13. The company was also able to develop the Margo hand sanitizer in 21 days which also stands as a
testament to the company’s robust R&D and supply chain.
14. The management believes that household insecticides is one category that should go up as people
become more health-conscious as a result of COVID-19.
15. Exo and Margo have been the best performing brands for the company so far in FY21.
16. The management admits that rural recovery has been much faster than urban recovery.
17. Around 85-90% of the company’s distributors are back and 50-60% of outlets are open now.
18. The company will be cautious with capex in FY21 and will hold on to its land bank. It will only sell
for the right price and will not be desperate to offload this asset without much return.
19. The effective tax rate for the next 2 years is expected to be 15% as the company continues to run
down its MAT.
20. The management is not concerned about the drop in Q4 mainly as it does not expect any major
change in market share for its products across all categories.
21. The management expects the post-wash segment to remain steady going forward and recover by
the end of the year.
22. The increased demand for small packs not only helps consolidate market share for the company
but also brings margin appreciation. There have been a 15-20% increase in sales volumes in small
packs in the relevant market for the company. On average margin on these packs is estimated to
be 25%.
23. The management is definitely looking to expand T-Shine to other southern states but is still some
ways from a national launch.
24. The management expects good growth from Exo as it is the first antibacterial dish soap in the
country.
25. The direct reach of the company is currently at 8.5 million outlets.
26. The promoter share in Jyothy labs has fallen from 67% to 62%. The promoters had earlier pledged
some share and they sold off 4% to remove that pledge. The remaining pledge is of Rs 60 odd Cr.
27. The management has admitted that the company will not make any additional capex in JFSL going
forward. The laundry business has been hit hard by the pandemic and the company is now looking
for a strategic partner to take it forward.
28. The company continues to pay royalties on Pril and Fa to Henkel as these are global brands.
29. The management expects 10-11% category growth in Household insecticides in FY21.
30. Around 50-70% of Household insecticides category sales are from coils.
Analyst’s View:
Jyothy Labs is a consistent performer in the FMCG segment in India. They have successfully carved out
a niche for themselves and have established themselves as market leaders in the fabric care and
dishwashing segment. The performance of the company was dismal in this quarter due to industry
disruption and the lockdown. The company has done well to be able to come back fast and resume
production much faster than many of its peers. It has also showcased its R&D capability by launching
Margo hand sanitizer in just 21 days. The company still faces the big issue of an impending decline in
the post-wash segment which is the company’s biggest earner. It remains to be seen how the company
will fare in the tough economic environment ahead and whether it will be able to capitalize on the
renewed focus on health and hygiene through its product offerings. Nonetheless, given the renewed
focus on health and hygiene going forward and the company’s good distribution reach and resilient
product portfolio, Jyothy Labs may turn out to be a pivotal FMCG stock to watch out for.
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Jyothy Labs Q4FY20

Financial Results & Highlights

Standalone Financials (In Crs)

Investor Conference Call highlights:

1. The company back to 80% of pre-COVID production levels currently.

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