Jyothy Labs Limited
Q4 FY25
Call date · May 12, 2025
1 · Management Commentary
Key Positives
- Fabric Care grew 2.1% in Q4 and 5% for FY25, led by strong volume growth, especially in liquid detergents.
- Ujala IDD Detergent Powder gained Kerala market share to 24.5% (from 23.4% in FY24); Southern India liquids revenue nearly tripled.
- Dish wash segment delivered double-digit volume growth in both bars and liquids.
- Operating EBITDA margin improved to 16.8% in Q4 (from 16.4% YoY); full-year EBITDA grew to Rs. 500 crore with margin up 20 bps to 17.5%.
- Company remains debt-free with a robust cash balance exceeding Rs. 750 crore.
- Board recommended a final dividend of Rs. 3.5 per share for FY25.
Key Negatives
- Overall revenue growth was modest: 1.1% value and 4% volume in Q4; 3.3% value and 6.4% volume for FY25.
- Gross margin for Q4 declined 30 bps YoY to 49.2% due to input cost pressures.
- Personal Care declined 8.8% in Q4 and 0.9% for the year, impacted by inflation and a high base; Margo franchise underperformed.
- Household Insecticides (HI) declined 4.8% in Q4 and 6.5% for the year; coils remain structurally weak and loss-making.
- Working capital cycle increased to 18 days (from 5 days in FY24), driven by higher inventory and receivables.
Forward Guidance
- Capex: No specific new capex plans disclosed; current capacity sufficient for both powder and liquid detergents.
- New products/segments: Recent launches include Ujala Fabric Conditioner, Maxo-Aerosol, Maxo Electric Racquet, and Ujala Young & Fresh; more NPDs planned in FY26.
- Expected client wins/losses: Not disclosed.
- Revenue/margin outlook: H1 FY26 expected to be challenging with mid-single digit volume growth; H2 expected to improve with potential double-digit volume growth and EBITDA margin guidance of 16–17%.
- Other strategic initiatives: Focus on affordable formats, portfolio expansion, cost management, and revitalizing Margo; divestment of Bangladesh subsidiary completed.
2 · Q&A Highlights
Q 1 (Composite): What is the outlook and strategy for liquid detergents, including market share, capacity, and margin profile?
A (Management):
• Liquid detergents are growing rapidly, especially in South India; market share gains in Kerala.
• Current capacity is sufficient; no major capex planned.
• Liquid detergents are margin dilutive currently but expected to converge with powder margins over time.
Q 2 (Composite): What is the approach to ad spend and margin guidance amid input cost pressures and competitive intensity?
A (Management):
• Q4 ad spend was calibrated due to macro conditions but long-term A&P commitment remains (8.5–9% of sales).
• EBITDA margin guidance for FY26 is 16–17%, with H1 under pressure and H2 expected to improve.
Q 3 (Composite): What is driving the persistent gap between volume and value growth, and when will it normalize?
A (Management):
• Gap (2–3%) is due to higher grammages, promotions, and competitive intensity; expected to persist in near term.
Q 4 (Composite): What are the new growth initiatives after earlier distribution and product expansion?
A (Management):
• Focus on new product development (NPDs) across categories; several launches planned in FY26.
Q 5 (Composite): What is the strategy for Household Insecticides (HI), especially coils and new formats?
A (Management):
• Coils are being de-emphasized due to losses; focus on profitable LV, aerosols, racquets, and exploring incense sticks.
Q 6 (Composite): How will the increased cash balance be utilized—any inorganic growth or shareholder returns?
A (Management):
• Board is evaluating both organic and inorganic opportunities; cash to be deployed as suitable opportunities arise.
Q 7 (Composite): What is the outlook for working capital and tax rate?
A (Management):
• Working capital cycle expected to remain in the 15–20 day range.
• Effective tax rate guided at 23–24% for FY26–27.
Q 8 (Composite): What is the volume growth outlook for FY26?
A (Management):
• Mid-single digit volume growth expected in H1; aiming for double-digit growth in H2.
3 · Other Key Numbers
- Q4 consolidated revenue from operations: Rs. 667 crore
- Q4 gross margin: 49.2% (down 30 bps YoY)
- Q4 operating EBITDA margin: 16.8% (vs. 16.4% YoY)
- FY25 value growth: 3.3%; volume growth: 6.4%
- FY25 gross margin: 50.1% (up 100 bps YoY)
- FY25 A&P spend: 8.4% of revenue (vs. 8.3% in FY24)
- FY25 EBITDA: Rs. 500 crore (vs. Rs. 480 crore in FY24); margin 17.5% (up 20 bps)
- FY25 PAT: ~Rs. 370 crore
- Effective tax rate Q4: 22.4%; FY25: ~23%
- Net working capital cycle: 18 days as of March 2025
- Cash balance: exceeding Rs. 750 crore
- Dividend: Rs. 3.5 per share for FY25
- Fabric Care segment margin: 23.6% in FY25 (vs. 24.2% in FY24)
- Estimated detergent market size: Rs. 34,000–35,000 crore; liquid detergent: Rs. 3,000–3,200 crore, growing 20–25% YoY
- Loss on Bangladesh subsidiary divestment: ~Rs. 4 crore (exceptional item)
- Sale consideration for Bangladesh subsidiary: Rs. 2.1 crore
- HI EBIT loss in FY25: ~Rs. 25 crore; loss reduction of Rs. 9–9.5 crore YoY
- Indirect reach increased by 8 lakh outlets; direct reach up by 1 lakh outlets in FY25
- LUP (low unit packs) contribution varies by category: 5–10% up to 25–30%
- Key raw material inflation: soap noodles up 30–40% YoY; SLES up 12–15%; LABSA and coconut shell powder also rising