Jyothy Laboratories (JLL) recorded modest 15% yoy growth in revenues at Rs1.8bn during Q2 FY13, impacted by distribution re-alignment. Secondary sales registered 25%+ yoy growth driven by Exo, which registered 18% yoy growth as the brand was launched across major cities and has received encouraging response. JLL has increased prices of Maxo by 12%, which impacted volumes but considerably improved profitability (Rs21mn profit against Rs79mn loss in Q2 FY12). The sales are already on a recovery path from November and the management expects to register 20%+ growth for H2 FY13.
Henkel revenues registered a 20% yoy decline as the company lost one full month sales due to change in distribution, resulting in a loss of Rs150mn during the quarter. We expect JLL to witness a strong surge in revenues during H2 FY13 and achieve the revenue target of Rs5bn in Henkel portfolio in FY13. We expect the company to register operating margins of ~12-13% for H2 FY13.
Gross margins for the quarter increased by 710bps to 49.2% as trade margin cuts and price increases fuelled profitability. Operating margins witnessed sharp 770bps expansion at 12.5% aided by sharp 860bps drop in raw material cost. The management has indicated adspends to sales ratio of ~9-10% for FY13 as the company plans slew of re-launches over next few months beginning with Ujala re-launch in Novemberâ€™12.
|As a % of net sales||Q2 FY12||Q2 FY11||bps yoy||Q1 FY12||bps qoq|
|Purchase of goods||24.6||23.1||154||21.3||336|
Change in margin structure across brands
|Stockist margin||Retailer margin|
- JLL registered 22.3% yoy growth in net profit partly aided by improved operating efficiency and higher other income. Effective tax rate for the quarter was lower at 19.6% against 26.3% in Q2 FY12. The PAT growth could have been even better but for the higher interest costs on Henkel acquisition. We have reduced our FY13 and FY14 EPS estimates by ~5%/~3% respectively factoring in the integration impact on sales.
|New||Old||Change (%)||New||Old||Change (%)|
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