Jyothy laboratories acquisition of henkel india


(Hemant V Bhatia) #41

Highlights of the meet by Capital Mkt
The consolidated net sales have gone up by 7.5% to Rs 414 crore driven by 6% volume growth and 2% price growth. Power brand grew by 9%.The net profit inclined by 5% to Rs 44.60 crore.
The price led growth was driven by price hike in core Ujala whitener.Henko Matics grew up 44% and Henko Stain Champion up 13%, Exo up 18%, Pril up 17% and Margo up 11% while Ujala whitener up 1% (volumes declined).Maxo saw 2% decline in revenues, dragged by weak performance of coils business. Liquid vaporizer business posted a solid 55%.Growth during the quarter was hit by a decline in coils business which was 75% of revenues due to weak season and the mgmt is confident of stronger quarters ahead on back of new launches and revival in coils business.
The company has lined up two new launches for Q2 - Maxo Genius – new liquid vaporizer machine (slated for August, 2015 launch) and its own version of paper-based HI product – Maxo Genius Magic Card.The company’s market share in coils stands at 18% and liquid vaporizer stands at 8% in Q1.
Liquid vaporizer is 25% of total mosquito business for the company.Henko portfolio delivered a robust performance despite significantly high competitive intensity and its market share in Matics range has inched up to all-time high of 7% as of Q1. Henko growth was mostly driven by volume.Margo soap has grown despite flat market growth for the soap industry in the quarter.The company has rolled out Ujala Crisp N Shine in Tamil Nadu market in May 2015 and new TV campaign has been rolled out in June 2015. It has launched two new variants including a variant with fragrance option.The mgmt expects double digit growth in Dishwash segment going forward.The company has repaid debt of Rs 65 crore and its net debt stood at Rs 280 crore.The effective tax rate for FY16 will be 14% and FY17 will see full tax rate.
The company is looking to sale a land of around 2 acre in Chennai around Rs 42 – 50 crore.
ASP to sales ratio for FY16 expected to be around 13%.


(Hemant V Bhatia) #42

Highlights of the Call By Capital Mkt
The consolidated net sales have gone up by 9% to Rs 400.73 crore driven totally by volume. The net profit inclined by 54% to Rs 38.77 crore.Power Brand sales grew by 11%.Gross Margin increased to 51.5% as compared to 47.8% in last year same period. Softening of commodity helped gross margin in Q2. Sees soft commodity regime for next 2 qtrs. 80% of gross margin improvement was able to take to bottom-line.EBIDTA margin was up from 10.7% to 13.8% YoY,A&P to Sales Ratio is at 12.2%. The mgmt said that ASP spend will be 12- 13% for FY16. Even though Q2 was low, ASP overall will be in-line with year guidance. ESOP will come down from December qtr.Other expense – 6 months number can be taken as runrate going fwd.
Fabric Care grew by 12% as Ujala did well. Ujala has grown by 19% in Q2. There is also base effect in Ujala. Expects 9-10% growth in Ujala gng fwd.Weight average price hike of 7% in Q1 taken in UjalaUajal Crisp & Shine launched in Tamil Nadu in June quarter.
Detergent market has grown by 10% value wise in Jan-June 2015 period, as per Neilsen. Henko volume grew by 6%. Value growth is challenging for Henko in current competitive environment. The mgmt said that lots of company has cut detergent prices in range of 25%.
The mgmt said that bucket wash of Henko will activate in coming days, presently only matic wash it is present. Bucket wash is 80% of premium detergent market.
Dishwash grew by 10%. Dishwash bar market has grown by 4% in volume and 3% in value, in Jan-June 2015 period, as per Nielsen. The company has grown by 15% in volume and 7% in value. Dishwash has seen mid teen volume growth in Pril liquid and Exo bar. There was slight drop in price in Exo bar due to price competition. Exo was re-launch in new packaging.
The mgmt said that dishwash liquid category de-grew due to urban problem and bar due to rural problem.Dishwash liquid value growth was more due to selling more bottles and fewer pouches. Pouches non-availability led to more growth of bottle.
Mosquito repellent grew by 14%. Coil market has grown by 4% in volume and 5% in value in Jan-June 2015 period, as per Nielsen. The company in coil has grown by 5% in volume and value. Liquid vaporizer market has grown by 6% in volume and 9% in value in Jan-June 2015 period, as per Nielsen. The company in coil has grown by 35% in volume and 39% in value. Maxo liquid total contribution to Maxo is 30%.Coil category not grown because of hottest September and October month.Liquid Vaporizer category also slowed down.
Maxo card will be launch soon all over India in next 2- 3 months. 15% of mosquito repellent revenue should come from card in next fiscal. Its margin is 5% lower than liquid.
Personal care sales have grown by just 2% as Margo has not done well in Q2.
South and East region is not performing good compared to West and North. As a result, Margo didnt do well, which is strong in South and East .Modern Trade sales contribution is 8% to total sales.Net Debt will be Rs 275-280 crore for March 2016


(ranvir dehal) #43

Another very important point to be kept in mind which is often ignored but has very very serious long term implications is the amount of amortization charged to the P&L account to arrive at net profit/EPS.
For this quarter as was for previous quarters…the amortization charged was rs 11 cr. This amortization was charged because JLL had acquired Henkel a few years ago.
If you think deeply, the brand/goodwill/franchise value of Henkel brands is only increasing under JLL. But still, as per GAAP, (ALAS!!!) they need to wear it down to zero in their balance sheet by charging it in their P&L account.
So, in order to calculate owner earnings (so to say…i m quoting warren buffett here) we can safely add back Rs 11 crore and hence actual net profit would be rs 49 cr instead of 38 cr…a jump of whopping 30%(aprox)
On an anualized basis ( if we double up the half year earnings of JLL and add 30%) the total nett profit will be Rs 84cr*2=Rs 164 cr plus 30%= 212cr (APROX)…which will amount to an EPS of Rs 12
If you also add Rs 36 cr charged on anual basis against ESOP as it will not exist by next year…you get a net profit of Rs 240cr and an EPS of Rs 13.5-14.

All this will make JLL really attractive!!!

Views on the analysis are invited from fellow members
Regars,
Ranvir Dehal


(ranvir dehal) #44

Another thing that that i must add here is the ESOP mentioned above would lead to a dilution of about 3%. So, this has to be factored in the above mentioned calculations


(Vishnu Ch) #45

CONFERENCE CALL - from Capital Markets

Will be able to sustain volume growth around 9% for Q4

Jyothy Laboratories (JLL) held conference call to discuss the results for the quarter ended Dec. 2015.

Highlights of the meet:

The consolidated net sales have gone up by 8% to Rs 384.79 crore. Volume grew by 9%. The net profit inclined by 47% to Rs 38.99 crore.

Power Brand sales grew by 9% with volume growth of 9%

A&P to Sales Ratio is at 13.1%.

EBIDTA margin is 13.9% as compared to 13.5% in last year same period due to increase in Gross Margin by 2.5% due to change in sales mix and decrease in RM/PM prices.

Soap and Detergent sales grew by 4% to Rs 287.25 crore, Home care by 25% to Rs 81.94 crore and Other products by 21% to Rs 4.59 crore.

Soap and Detergent has grown in volume but not in value due to competitive intensity and deflationary environment.

Fabric care sales increased by just 1% to Rs 159.12 crore. Ujala sales increased by 6%. Ujala volume growth was flat. Ujala increasing shares in a stagnant Fabric Whitener category. As per AC Nielsen, market share during Jan-Dec 15 increased from 75% to 77%. Ujala Crisp and Shine is estimated to touch turnover of 2.5 crore in its first year. It will be roll out in more market in FY17.

The mgmt expects Ujala to see growth of 9% FY16.

Henko Matic has shown good growth of 28% while Henko stain champion and bar did not grow due to high competitive intensity. Henko Matic value share during Jan-Dec 15 was 5.9% vs 4.9% last year.

Henko – will focus on bucket wash starting Q4 as its much bigger market than matic.

Premium laundry wash business is doing well whereas mass one is not doing well.

The mgmt said that in detergent, it will invest at premium end and not go behind mass end.

Dishwashing sales increased by 9% to Rs 119.72 crore. Exo volume grew by 22% and value by 7%. As per AC Nielsen, Dishbar category volume growth was 10% and value was 10.5%. As per AC Nielsen, market share during Oct-Dec 15 saw growth to 10.31%.

Pril volume grew by 10% and value by 15%. The company continuing strong growths on the back of the re-launch. As per AC Nielsen, liquid category volume growth was 15.7% and value was 15.8%. As per AC Nielsen, market share during Oct-Dec 15 saw growth to 17.12%

Mosquito repellent sales increased by 32% to Rs 52.96 crore. Maxo coil value grew by 16% and volume by 11%. As per AC Nielsen, coil category volume growth was 4.9% and value was 6.5%.

Maxo Liquid value grew by 53% and volume by 35%. As per AC Neilsen, liquid vaporizer category volume growth was 8% and value was 14%.

Maxo coil market share is 20%. Maxo Liquid market share is 8% as per Nielsen but the mgmt believe it is higher than this. Presently, its No 3 player in liquid at country level.

Liquid vaporizer is extremely profitable business, after Ujala and Margo. Coil business is volatile as its seasonal business, but at profitability level, it doesn’t move much. Liquid vaporizer driving profitability of Mosquito repellent business.

Maxo genius magic card sales for YTD was Rs 2 crore. But as the company is now launching this pdts across nation, expects good growth in coming quarters.

Magic card - 90% market is control by one player and another player holds 7- 8%. Market size of this category is Rs 328 crore. The company is looking at market share of 22% in next 2 yrs.

Personal care sales increased by 17% to Rs 34.33 crore. Margo soap grew by 12%.

Other products sales decreased by 13% to Rs 7.45 crore.

The company’s direct reach is 5 lakh outlet vs last year of 4 lakh. New addition happen in rural region

Indirect reach - Ujala is available in more than 3 mn outlets, while rest of the pdts reach is around 1 mn.

The mgmt said that future drop in crude oil will not necessary means another drop in raw marterail prices. Already industry has got 80% benefit of it.

There will be some gross margin improvement in coming quarter if the crude oil prices remain where it is today.

ESOP cost in Q4 will be Rs 2.3 crore, in Q1 FY17 will be Rs 2.3 crore, in Q2 Rs 1.7 crore and Q3 and Q4 each will have Rs 1 crore.

Cash profit for the quarter was 48.8 crore.

Rs 400 crore debenture is the only debt on book, which will get repaid next yr.

The company became more competitive in detergent and dish wash by increasing spend in ASP which help volume growth.

The mgmt said that demand continues to be soft and expected to remain so. Maxo card launch in this quarter expected to fuel growths further. It can see price competition to stabilize in laundry and dish wash in Q4. It will be able to sustain volume growth around 9% for Q4.


(ranvir dehal) #46

Growth in Mosquito Repellents, specially liquids is very heartening specially on the back of the fact that it is a relatively under penetrated category. Growth in henko matic is also good.

Growth in pril was 15% by value. Category growth was also 15%. Then how did it gain market share is not known??? Also, its volume growth was below market growth.
Does anybody know??


(hemtan100) #47

Henkel has an option to buy 26% stake in the company. This option exists till 31s March 2017.

If and when that happens, the stock could see huge upside. But since I don’t prefer banking on such binary events, I would leave that aside and focus on the fundamentals:

Q1FY17
Gross margins at 50%. Mgmt guided for maintaining GM at 50% throughout FY17.
Healthy volume and margin growth across segments except for household insecticides.
Relatively cheaper FMCG stock.


(ranvir dehal) #48

Descent promoter buying seen in the stock.
May be an indicator of good things to come.


(Saket) #49

Short Summary of Q3 conference call:


we have also prepared few other summaries. Sharing here: https://goo.gl/5RTk0o

Read disclaimer for summaries here: https://goo.gl/HELov8


(Sujay Ghosh) #51

Annual Report 2016-17
http://www.jyothylaboratories.com/admin/docs/Jyothy%20Lab%20AR%202016-17%20Final_Small%20Size%20(1).pdf

Q4 FY17 Research Report
ICICI
http://content.icicidirect.com/mailimages/IDirect_JyothyLabs_Q4FY17.pdf
Karvy
http://karvyonline.com/viewdocument.aspx?DocumentID=15716
Axis
https://simplehai.axisdirect.in/app/index.php/insights/reports/downloadReport/file/Jyothy_Lab_Q4FY17+-+Result+Update+-+Axis+Direct+-+25052017_25-05-2017_11.pdf/type/fundamental


(gautham1) #52

Anyone tracking it ?. Decent results. Stock fell 15% since henkel didn’t buy stake.


(ranvir dehal) #53

Ya. Holding it for last 4 Yrs. Results are good. Even Better is the fact the oct sales are up 19%…as per Mr Kamath.
Henkel deal cancellation got the better of the publicity I guess. I would continue to hold happily and would even recommend buying due to this correction.
Views are personal. Please do ur due diligence.


(khushi) #54

Looking at a 3 year chart, i can conclude that there is a strong support around 300 levels and the stock can bounce from hereon.

Views invited.

Just dont know fundamentally the impact on Henkel deal cancellation in short term and medium term.

Experts please throw some light here.

Disc : Not Invested.


(Dakshina) #55

Outlook Business Magazine dated December 22, 2017 contains coverage/recommendation of this stock
by Ambareesh Baliga ( Independent Market Expert). Worth reading.

This issue is a special edition and contains recommendation / Coverage of 16 stocks.

Disc. Not invested but interested


(stockforwealth) #56

What are the other stock recommendations in Outlook Business, 22 Dec. 2017 issue?


(shyamutty) #57

good results by Jyothy results.


(Devang) #58

Experts view invited. What was the reason for Q1FY18 degrowth?


#59

Good results in Q1.

Following are my notes from the presentation:

  1. Net revenue at 405 cr vs 336 cr Q1 2018 up by 20.6%
    Operating EBITDA margin at 15.1% vs 13% Q1 2018
    Net profit 32 cr vs 21 cr up by 57.1%
    EPS Rs.1.78 vs 1.13 in Q1 2018

  2. Gross margin down to 47.4% vs 51% in same period last year on account of RM price increases (because crude is inching northwards?)
    A&P to sales ratio at 7.8% vs 9.1% last year

  3. Dishwashing, household insecticides and personal care categories registered strong growth of 27.9, 28% and 27.6% respectively over same period last year.
    Fabric care registered least growth of 13.4%

  4. Maxo, Margo, EXO and Pril registered strong growth of 28%, 29.5%, 29.6% and 23.2%

  5. Ujala fabric whitener has 80.6% market share; Ujala detergent has 17% market share
    EXO bar has 10.9% and pril liquid has 17.1% market share respectively

  6. Maxo LV has 8.7% and coil has 21.9% market share

  7. Margo benefitting from Herbal/natural tailwinds
    rural demand is good

  8. 2018- company will focus on organic growth and in 2019 company is looking at acquisitions for 800-1000cr. company has 250 cr debt currently.
    Company is generating 243 cr cash from operations. Hence debt can be easily serviced , not a problem.

  9. company is also into insect repellants but market share is very low. 90% market share is with leader- read GCPL(HIT)