Result Update

October 25, 2018

Rating matrix
Rating : Buy Jyothy Laboratories (JYOLAB) | 180
Target : | 215
Target Period : 12-15 months
Potential Upside : 19% Dishwashing & Fabric care support growth…
What’s changed?  Jyothy Labs (JLL) witnessed revenue growth of 7.1% to | 427.7
Target Changed from | 250 to | 215 crore, partially supported by 4.4% volume growth in addition to
EPS FY19E Unchanged average price hike of 5% taken in detergents category
EPS FY20E Changed from | 6.2 to | 6.1  Power brands Ujala, Exo, Henko, Margo & Pril saw strong growth
Rating Unchanged
of 6.1%, 14.7%, 20.7%, 6.3% & 11.9% respectively. However,
Maxo brand declined by 19.8%.
Quarterly performance (Standalone)  Operating margins increased by 92 bps to 17.1% mainly on the
Q2FY19 Q2FY18 YoY (%) Q1FY19 QoQ (%) back of 157 bps & 33 bps decrease in raw material cost &
Sales 427.7 399.2 7.1 402.6 6.2 marketing expenses to sales, partially offset by 66 bps & 32 bps
EBITDA 73.2 64.6 13.3 58.3 25.5 increase in employee expenses & other expenses to sales.
EBITDA (%) 17.1 16.2 92 bps 14.5 262 bps  Supported by healthy revenue growth and operating
PAT 45.3 42.3 7.2 32.4 40.0
performance, JLL reported profit growth of 7.2% to | 45.3 crore
Key financials (Standalone) Striving to achieve operational efficiencies & improve distribution network
| Crore FY17 FY18 FY19E FY20E
Net Sales 1,630.1 1,684.9 1,877.0 2,074.7 JLL has expanded its distribution network with its total number of outlets
EBITDA 260.2 277.5 302.0 338.2 growing 7x from 0.4 million outlets in FY14 to 2.8 million outlets in FY18
Net Profit 202.0 160.5 179.8 221.4 across the country. JLL has more than 1000 sales personal to support 2.8
EPS (|) 5.6 4.4 4.9 6.1 million outlets. JLL is planning to strengthen its modern trade channels in
addition to fine-tuning of products in accordance to the customer needs
and thus has segregated its distribution strategy to address rural and
Valuation summary (Standalone)
urban markets separately. JLL maintained its efforts to take its successful
FY17 FY18 FY19E FY20E
P/E (x) 32.4 40.8 36.4 29.6
regional brands to national level. With a strong presence in South India,
Target P/E (x) 38.7 48.7 43.5 35.3 JLL has now set its focus to expand its reach in the rural markets. Off late,
EV/EBITDA (x) 23.4 22.0 20.0 17.9 JLL’s non-south business has grown at a rapid pace as compared to its
Price to book (x) 10.0 9.6 9.2 8.6 south business. The company has managed to increase its contribution
Mcap/Sales(x) 4.0 3.9 3.5 3.2 from non-south market to 59% from 56% in FY14. We believe that the
RoCE (%) 32.1 35.1 33.8 37.0 company’s growing brand value, product portfolio and effective strategies
RoNW(%) 30.9 23.5 25.3 29.1 will help it to maintain future growth.
Launch of mosquito repellent in incense sticks
Stock data
JLL launched 100% natural and chemicals free incense stick - Maxo
Particular Amount
Market Capitalization (| Crore) 6,544.6
Agarbathi in Q2FY19. Test marketing of this product was done in UP,
Total Debt (FY18) (| Crore) 0.0 Bihar & Maharashtra. Mosquito repellent incense stick category has
Cash and Investments (FY18) (| Crore) 231.1 posted 101% revenue CAGR in last three years with a size of |385 crores
EV (| Crore) 6,313.5 (YTD CY18). The market currently consists of hundreds of local brands of
52 week H/L 249 / 163 which many are illegal/unorganized and use harmful pesticides. With high
Equity capital | 36.4 crore growth and huge popularity being witnessed in this segment, we believe
Face value |1 JLL has made a right move to capture the opportunity by foraying into
this category. Also, to counter harmful illegal pesticides in current
Price performance
mosquito repellent incense sticks category, JLL is taking concerted action
1M 3M 6M 12M
Jyothy Lab -5.9 -18.6 0.4 -2.2
with the support of HICA (Home Insect Control Association).
Emami -20.2 -25.3 -26.9 -27.2 Flagship brands to witness continued volume growth; reiterate BUY
GCPL -6.9 -18.5 -2.2 18.5
HUL -0.3 -4.9 8.7 24.7 Flagship brands contribute ~87% of FY18 sales, growing at 11% CAGR in
the last five years. JLL has directed its focus primarily to power brands in
Research Analyst a bid to improve visibility and aid brand recall. JLL is investing in
Sanjay Manyal advertising and promotional activities to market these power brands and
sanjay.manyal@icicisecurities.com maintain its growth rate in coming years. It has been able to reduce its
debt over the years thereby resulting in net profit CAGR of 28.5%. With its
Kapil Jagasia, CFA
brand building and effective distribution strategies in place, we estimate
kapil.jagasia@icicisecurities.com
margins for FY19E, FY20E at 16.1%, 16.3%, respectively. We estimate
revenue CAGR of 10.5% for FY18-20E. We maintain our BUY
recommendation on the stock with a revised target price of | 215/share.

ICICI Securities Ltd | Retail Equity Research

Variance analysis (Standalone)
Q2FY19 Q2FY19E Q2FY18 YoY (%) Q1FY19 QoQ (%) Comments
Net Sales 427.7 450.5 399.2 7.1 402.6 6.2 Net sales grew by 7.1% YoY, partially supported by 4.4% volume growth in
addition to average price hike of 5% taken in detergents

Raw Material Expenses 231.2 238.6 222.1 4.1 213.3 8.4

Employee Expenses 46.3 44.6 40.6 14.0 47.3 -2.2
SG&A Expenses 22.5 37.9 22.3 0.8 31.5 -28.8 Advertising expenses maintained at ~5% of sales
Other operating Expenses 54.6 56.3 49.7 9.9 52.1 4.8
EBITDA 73.2 73.0 64.6 13.3 58.3 25.5
EBITDA Margin (%) 17.1 16.2 16.2 92 bps 14.5 262 bps Operating margins increased by 92 bps on the back of 157 bps & 33 bps
savings in raw material costs & marketing expenses to sales, partially offset
by 66 bps & 32 bps increase in employee expenses & other expenses to sales

Depreciation 13.9 15.4 13.8 0.6 13.8 0.7

Interest 7.1 10.2 10.4 -32.4 7.7 -8.6
Other Income 4.7 3.1 11.8 -60.3 4.9 -4.1
Exceptional Income/(Expenses) 0.0 0.0 0.0 NA 0.0 NA

PBT 56.9 50.6 52.1 9.2 41.7 36.5

Tax Outgo 11.6 10.1 9.8 17.6 9.3 24.3
PAT 45.3 40.5 42.3 7.2 32.4 40.0 Supported by healthy revenue growth and operating performance, PAT grew
by 7.2% to | 45.3 crore
Segment wise sales (%)^
Dishwashing 142.7 125.3 13.9 132.8 7.5 Strong growth in Pril & Exo
Fabric Care 170.6 154.0 10.7 175.7 -2.9 Henko led the growth momentum in Fabric Care
Household Insecticides 49.8 62.1 -19.8 32.3 54.2 Maxo recorded muted growth on account of poor season
Personal Care 51.3 48.4 6.1 52.7 -2.6 Margo witnessed healthy growth
Source: Company, ICICI Direct Research; ^ YoY growth numbers are reported by company considering GST impact in base quarter for like-to-like comparison

Change in estimates (Standalone)

FY19E FY20E
(| Crore) Old New % Change Old New % Change Comments
Sales 1870.0 1877.2 0.4 2,066.4 2074.7 0.4 We marginally tweak our estimates
EBITDA 298.2 302.1 1.3 356.7 338.2 -5.2
EBITDA Margin (%) 15.9 16.1 15 bps 17.3 16.3 -96 bps
PAT 183.0 179.9 -1.7 230.7 226.4 -1.9
EPS (|) 5.0 4.9 -1.0 6.4 6.2 -2.7
Source: Company, ICICI Direct Research

Assumptions (Standalone)
Current Earlier
FY16 FY17 FY18* FY19E* FY20E FY19E FY20E Comments
Dishwashing 476.4 510.5 542.8 590.5 650.9 612.2 674.8 Minor change in estimates
Fabric Care 675.1 731.4 744.6 812.5 911.2 842.3 944.6
Household Insecticides 278.1 261.4 222.2 235.5 247.3 244.4 256.6
Personal Care 147.6 159.9 172.7 191.6 212.6 198.2 220.0
RM Expenses to Sales (%) 51.5 54.3 51.1 52.3 51.9 52.9 51.9
Ad Expenses to Sales (%) 7.3 7.2 9.6 10.1 7.1 10.1 7.1
Employee Cost to Sales (%) 9.8 9.3 9.9 9.5 9.0 9.5 9.0
Source: Company, ICICI Direct Research; *Revenue under GST (not comparable to historical numbers)

ICICI Securities Ltd | Retail Equity Research Page 2

 Conference call highlights

 JLL reported volume growth of 4.4% impacted by floods in Kerala

(which accounts for ~15% of the company’s sales) and 20% YoY
decline in HI category. JLL estimates loss in sales in Q2FY19 due to
Kerala floods to the tune of |25-30 crore, however, they believe the
situation in Kerala is back to normal
 Dishwashing and Fabric care segment posted 13.9% & 10.8% growth,
respectively. The company’s aggressive push for Margo saw healthy
demand with increased focus on Naturals products leading to 6.1%
growth in the personal care segment. On the other hand, Household
Insecticides category saw 19.8% de-growth during the quarter on
account of poor season
 Brand wise Ujala, Exo, Henko, Margo and Pril witnessed strong
volume growth during the quarter
 Henko volumes grew an impressive 20.7% as recently launched |10
SKU has gained strong traction and now contributes ~10% of the
brand’s sales
 In Q2FY19, Fabric care, which includes Ujala and Henko brands,
contributed 40% of revenue, Dishwashing contributed 33% to
revenues, Household Insecticides (HI) contributed 13% to revenues
while Personal care contributed 12% to revenues
 JLL expects pickup in rural demand to continue which should keep
the overall growth trajectory strong
 JLL would continue to focus on expansion of Ujala IDD and Crisp and
Shine in Tamil Nadu this year. Further, they plan to expand the
distribution reach to Karnataka and Andhra Pradesh as well
 JLL continues to see scrubbers as a big opportunity for its Exo brand.
They are the only major scrub brand having a good presence in the
Dishwash segment as well
 Operating margins during the quarter improved by 92 bps on the
back of a decline in raw material costs and marketing expenses to
sales. However, there was 66 bps & 32 bps increase in employee
expenses & other expenses to sales respectively, partially offset the
improvement in margins.
 New launches during the quarter included Pril Tamarind, Margo
Glycerine and test marketing of Maxo Agarbathi in UP, Bihar and
Maharashtra, which is a 100% natural solution
 JLL expects 12-14% topline growth for FY19E, contributed by 7-8%
volume growth, gross margins at 45% with some expansion in
EBITDA margins to 17%
 Though JLL has taken average price hike of 5% in detergents, it
believes crude oil led inflationary pressure in raw materials alongwith
rupee depreciation is likely to exert cost pressures going forward. It
would be able to maintain margins at current level of |73/USD and
with Brent oil at US$80 /bbl
 Maintenance capex of |20-25 crore would be required every year

ICICI Securities Ltd | Retail Equity Research Page 3

 Exhibit 1: Power brands performance for quarter (in | crore)
Brand Q2FY19 Q2FY18 Growth
Ujala 92.0 87.0 5.7%
Exo 107.0 94.0 13.8%
Maxo 50.0 62.0 -19.4%
Henko 47.0 39.0 20.5%
Margo 46.0 43.0 7.0%
Pril 36.0 32.0 12.5%
Total Power Brands 378.0 357.0 5.9%
Source: RHP, ICICI Direct Research

Exhibit 2: Revenue trend (Standalone) Exhibit 3: A&P to remain elevated (standalone)

2500 25
2074.7 55 14
23.4 1877.0 10.2
2000 13.8 20 54 53.3 10.1 12
1607.1 1630.1 1684.9 54.4
1428.3 10.8 10
1500 1255.1 15 53 7.2
11.4 53.9 12.0 7.3
10.5 51.7 8
52
1000 10 52.3 6
12.5 3.4 51
51.5 4
500 1.4 5
50 2
0 0 49 0
FY14 FY15 FY16 FY17 FY18E* FY19E FY20E FY14 FY15 FY16 FY17 FY18E* FY19E FY20E
Sales (| crore) Sales Growth (%) RM cost to sales (%) - LHS Marketing Expenses to sales (%) - RHS

Source: Company, ICICI Direct, Research Source: Company, ICICI Direct, Research
*Net revenue under GST (not comparable to historical numbers) *Considering Net revenue under GST for calculation

Exhibit 4: EBITDA growth trend (%)) Exhibit 5: PAT trend (| crore)

17 16.1 16.3
15.9 250
16
200
15 14.2
14 13.3 150
13
11.5 100
12
11 50
108.4 144.8 74.5 202.0 160.5 179.8 221.4
10 0
FY19E

FY20E
FY14

FY15

FY16

FY17

FY18E*

FY14 FY15 FY16 FY17 FY18E FY19E FY20E

Source: Company, ICICI Direct, Research Source: Company, ICICI Direct, Research
* Considering Net revenue under GST for calculation

ICICI Securities Ltd | Retail Equity Research Page 4

 Outlook & Valuation
With its brand building strategies, effective distribution network and
operational efficiencies, we estimate JLL’s margins for FY19E, FY20E at
16.1%, 16.3%, respectively. We expect revenue CAGR of 10.5% for FY18-
20E.

The long term growth story of the company on account of an increase in

penetration (for dishwash, house insecticide, naturals products) and
premiumisation remains intact. We are confident on account of new
launches in high growth areas alongwith positive volume led growth and
believe dishwashing products Exo & Pril along with naturals’ product like
Margo provide growth opportunity in the respective space. Thus, we
maintain our BUY recommendation on the stock with a revised target
price of | 215/share.

Exhibit 6: Valuations (standalone)

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY17 1630.1 1.4 11.1 170.3 32.4 23.4 30.9 32.1
FY18 1684.9 3.4 8.8 -20.6 40.8 22.0 23.5 35.1
FY19E 1877.0 11.4 4.9 -44.0 36.4 20.0 25.3 33.8
FY20E 2074.7 10.5 6.1 23.1 29.6 17.9 29.1 37.0
Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 5

Recommendation history vs. Consensus s
250 80.0
75.0
70.0
200
65.0
(|)

60.0

(%)
55.0
150
50.0
45.0
100 40.0
Sep-15 Dec-15 Feb-16 May-16 Jul-16 Oct-16 Dec-16 Mar-17 May-17 Jul-17 Oct-17 Dec-17 Mar-18 May-18 Jul-18 Oct-18

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Bloomberg, Company, ICICI Direct Research

Key events
Date Event
Aug-10 JLL raises | 228 crore via QIP at an issue price of | 282.62/share.
Mar-11 JLL acquires 14.9% in Henkel India in an all cash deal for | 60.7 crore (| 35/share) from Tamil Nadu Petro Products Ltd
Mar-11 JLL acquires 100% stake in Delhi based Diamond Fab Care Ltd for | 16.5 crore
May-11 JLL further buys 50.97% in Henkel India for | 118.72 crore (| 20/share). JLL's total holding in Henkel now stands at 65.9%
May-11 JLL acquires 100% stake in Akash Cleaners (Mumbai) for | 19.4 crore
Oct-11 JLL acquires 12.05% in Henkel India via open offer increasing its overall share in Henkel India to 83.65%
May-12 Announces bonus issue in the ratio of 1:1 increasing its share capital from 8.06 crore to 16.12 crore
Jun-13 JLL issues 0.5 crore shares to the shareholders of Jyothy Consumer Products Ltd (earlier know as Henkel india) following the amalgamation of JCPL and JLL.
The ratio of shares issued was 1:4, i.e. for every four shares of JCPL owned, one share of JLL was offered
Oct-13 JLL raises | 400 crore via non-convertible debentures payable after three years to repay its debt on the books
Dec-13 JLL raises | 263 crore via preferential allotment of shares (1.5 crore shares at | 175.15/share) to the promoter group, Sahayadri Agencies Ltd. Post the
allotment, the share capital of the company increased to 18.1 crore shares. The money raised would be used for brand building, innovation & acquisition
Nov-16 JLL redemees 4,000 non-convertible debentures (NCDs) aggregating to | 400 crore listed on NSE
Jan-18 JLL is targeting revenues of ₹500 crore from current | 200 crore by 2021 from its ayurvedic and naturals portfolio where it has brands like Margo toilet soap
and Neem toothpaste
May-18 JLL is planning to go pan India in the ₹1,600 crore toilet-cleaning agent segment under its own brand Tshine after launching it in Kerala early this year
Jun-18 Announces bonus issue in the ratio of 1:1 increasing its share capital from 18.17 crore to 36.35 crore
Jul-18 JLL is looking for a strategic investor in its laundry business, which is operated through its 75% owned subsidiary Jyothy Fabricare Services
Aug-18 JLL is set to to take a weighted average price hike of 5% to offset rising raw material costs, which includes crude prices and weak rupee
Source: Company, ICICI Direct Research

Top 10 Shareholders Shareholding Pattern

Rank Name Latest Filing Date % O/S Position (m) Change (m) (in %) Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
1 Ramachandran (M P) 30-Jun-18 19.29 70.1 -70.1 Promoter 66.9 66.9 66.9 66.9 66.9
2 Sahyadri Agencies, Ltd. 30-Jun-18 4.13 15.0 -15.0 FII 15.0 15.0 16.4 16.2 15.9
3 ICICI Prudential Life Insurance Company Ltd. 30-Jun-18 2.55 9.3 -8.2 DII 5.3 5.3 5.9 6.2 7.0
4 Divakaran (M P) 30-Jun-18 1.99 7.2 -7.2 Others 12.9 12.9 10.8 10.7 10.2
5 First State Investments (Singapore) 31-Aug-18 1.72 6.2 0.0
6 Sundaram Asset Management Company Limited 31-Aug-18 1.46 5.3 0.0
7 Sidharthan (M P) 30-Jun-18 1.43 5.2 -5.2
8 Stewart Investors 30-Jun-18 1.43 5.2 -5.2
9 Deepthy (M R) 30-Jun-18 1.42 5.2 -5.2
10 Mirae Asset Global Investments (India) Pvt. Ltd. 31-Aug-18 1.38 5.0 0.0
Source: Reuters, ICICI Direct Research

Recent Activity
Buys Sells
Investor name Value Shares Investor name Value Shares
Mirae Asset Global Investments (Hong Kong) Limited 7.80m 2.57m Ramachandran (M P) -240.43m -70.14m
Mirae Asset Global Investments Co., Ltd. 1.12m 0.37m Sahyadri Agencies, Ltd. -51.42m -15.00m
UTI Asset Management Co. Ltd. 0.36m 0.14m Aberdeen Standard Investments (Asia) Limited -36.27m -10.58m
Mirae Asset Global Investments (India) Pvt. Ltd. 0.10m 0.03m ICICI Prudential Life Insurance Company Ltd. -28.13m -8.21m
BlackRock Asset Management Ireland Limited 0.02m 0.01m Divakaran (M P) -24.80m -7.24m
Source: Reuters, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 6

Financial summary
Profit and loss statement | Crore Cash flow statement | Crore
(Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E
Total operating Income 1632.0 1699.7 1877.0 2074.7 Profit before Tax 134.9 183.4 179.8 221.4
Growth (%) 1.5 4.2 10.4 10.5 Add: Depreciation 54.7 56.6 64.1 60.9
Raw Material Expenses 886.6 868.8 981.9 1,072.7 (Inc)/dec in Current Assets -61.5 -45.9 126.0 -40.1
Employee Expenses 152.0 168.0 178.3 203.3 Inc/(dec) in CL and Provisions -6.4 43.1 -14.5 76.9
Marketing Expenses 117.6 162.9 189.6 211.6 Others 0.0 0.0 0.0 0.0
Administrative Expenses 58.4 54.6 0.0 0.0 CF from operating activities 121.7 237.2 355.4 319.1
Other expenses 154.2 165.1 225.2 249.0 (Inc)/dec in Investments 28.1 -91.5 0.0 0.0
Total Operating Expenditure 1,368.9 1,419.3 1,575.0 1,736.6 (Inc)/dec in Fixed Assets -55.4 5.6 -150.0 -150.0
EBITDA 263.1 280.4 302.0 338.2 Others 7.2 4.7 -39.4 -20.0
Growth (%) 15.4 6.6 7.7 12.0 CF from investing activities -20.1 -81.1 -189.4 -170.0
Depreciation 54.7 56.6 64.1 60.9 Issue/(Buy back) of Equity 0.1 0.0 18.2 0.0
Interest 50.9 42.4 25.4 15.2 Inc/(dec) in loan funds 49.2 25.8 0.0 0.0
Other Income 11.4 30.0 12.3 14.7 Dividend paid & dividend tax -21.8 -131.2 -128.7 -171.6
PBT 168.8 211.5 224.8 276.8 Inc/(dec) in Sec. premium 0.0 0.0 0.0 0.0
Others 0.0 0.0 0.0 0.0 Others 0.0 0.0 -42.9 0.0
Total Tax -36.1 47.9 45.0 55.4 CF from financing activities 27.4 -105.4 -153.4 -171.6
PAT 204.9 163.5 179.8 221.4 Net Cash flow 129.1 50.7 12.6 -22.4
Growth (%) 175.0 -20.2 10.0 23.1 Opening Cash 15.8 34.1 55.0 67.6
EPS (|) - Diluted 11.1 8.8 4.9 6.1 Miscellaneous adjustments 0.0 0.0 0.0 0.0
EPS (|) - Adjusted 11.1 8.8 4.9 6.1 Closing Cash 95.5 84.9 67.6 45.1
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

Balance sheet | Crore Key ratios

(Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E
Liabilities Per share data (|)
Equity Capital 18.2 18.2 36.4 36.4 EPS 11.1 8.8 4.9 6.1
Preference Capital 0.0 0.0 0.0 0.0 Cash EPS 14.1 11.9 6.7 7.8
Reserve and Surplus 635.5 665.3 673.5 723.3 BV 36.0 37.6 19.5 20.9
Total Shareholders funds 653.6 683.5 709.9 759.7 DPS 6.0 6.0 4.0 4.0
Total Debt 0.0 0.0 0.0 0.0 Cash Per Share 5.3 7.0 3.8 3.2
Deferred Tax Liability 0.0 0.0 0.0 0.0 Operating Ratios (%)
Minority Interest / Others 21.4 30.8 29.8 28.8 EBITDA Margin 15.9 16.3 16.1 16.3
Total Liabilities 675.0 714.2 739.6 788.4 EBIT / Net Sales 12.6 13.1 12.7 13.4
Assets PAT Margin 12.4 9.4 9.6 10.7
Gross Block 913.5 917.7 1,067.7 1,217.7 Inventory days 43.7 40.5 40.0 40.0
Less: Acc Depreciation 371.8 428.4 492.5 553.3 Debtor days 25.1 33.8 24.0 24.0
Net Block 541.7 489.3 575.2 664.3 Creditor days 32.4 36.2 30.0 30.0
Capital WIP 8.0 15.3 15.3 15.3 Return Ratios (%)
Total Fixed Assets 549.7 504.6 590.5 679.6 RoE 30.9 23.5 25.3 29.1
Goodwill on Consolidation 0.0 0.0 0.0 0.0 RoCE 32.1 35.1 33.8 37.0
Inventory 195.2 187.0 205.7 227.4 RoIC 97.2 88.0 105.5 99.8
Debtors 112.0 156.1 123.4 136.4 Valuation Ratios (x)
Loans and Advances 0.0 0.0 0.0 0.0 P/E (Diluted) 32.4 40.8 36.4 29.6
Other Current Assets 33.6 59.6 36.0 39.8 P/E (Adjusted) 32.4 40.8 36.4 29.6
Cash 95.5 127.2 139.8 117.3 EV / EBITDA 23.4 22.0 20.0 17.9
Total Current Assets 450.3 633.7 520.3 538.0 Market Cap / Sales 4.0 3.9 3.5 3.2
Creditors 144.8 167.2 154.3 170.5 Price to Book Value 10.0 9.6 9.2 8.6
Provisions & Others 540.2 577.6 576.0 636.6 Solvency Ratios
Total Current Liabilities 685.0 744.7 730.2 807.2 Debt/EBITDA 0.0 0.0 0.0 0.0
Net Current Assets -234.7 -111.0 -209.9 -269.2 Debt / Equity 0.0 0.0 0.0 0.0
Others Assets 360.1 320.7 359.1 378.0 Current Ratio 0.5 0.7 0.5 0.5
Application of Funds 675.1 714.2 739.6 788.4 Quick Ratio 0.2 0.4 0.2 0.2
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 7

ICICI Direct coverage universe (FMCG)
CMP M Cap EPS (|) P/E (x) Price/Sales (x) RoCE (%) RoE (%)
Sector / Company (|) TP(|) Rating (| Cr) FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E
Colgate (COLPAL) 1,107 1,150 Hold 29,483 24.8 26.8 30.3 44.7 41.3 38.0 6.9 6.6 6.0 62.9 58.5 59.0 44.7 41.4 41.6
Dabur India (DABIND) 398 475 Buy 75,530 7.7 8.6 10.4 51.6 46.4 38.3 9.7 8.5 7.5 26.2 26.6 29.6 23.8 23.8 26.1
GSK CH (GLACON) 6,940 7,700 Buy 28,177 166.5 192.5 212.8 41.7 36.0 36.2 6.4 5.8 5.3 29.8 30.8 31.2 20.1 21.2 21.3
Hindustan Unilever (HINLEV) 1,566 1,800 Buy 328,320 24.2 28.9 35.3 64.6 54.3 51.0 9.5 8.6 7.5 79.9 100.3 120.7 74.7 86.7 103.8
ITC Limited (ITC) 286 365 Buy 364,422 9.2 10.3 11.5 31.0 27.7 31.8 9.1 8.2 7.5 30.9 34.0 36.2 21.3 23.6 25.0
Jyothy Lab (JYOLAB) 180 215 Buy 6,545 8.8 4.9 6.1 20.4 36.4 35.3 3.9 3.5 3.2 35.1 33.8 37.0 23.5 25.3 29.1
Marico (MARLIM) 300 400 Buy 45,157 6.4 8.0 9.6 46.8 37.7 41.6 7.1 5.8 5.2 38.9 44.2 45.9 32.5 36.3 37.3
Nestle (NESIND) 9,500 12,000 Buy 104,972 127.1 158.2 194.4 74.8 60.1 61.7 10.4 9.3 8.2 34.9 45.3 47.7 37.6 42.2 42.7
Prabhat Dairy (PRADAI) 107 185 Buy 1,543 4.8 6.3 9.2 32.9 32.6 25.1 1.0 0.9 0.8 9.6 11.3 14.1 7.0 8.2 11.2
VST Industries (VSTIND) 2,830 4,000 Buy 4,393 117.8 158.4 175.4 24.0 17.9 16.1 4.6 3.6 3.4 46.9 54.4 51.5 31.3 36.3 34.7
Varun Beverage (VARBEV) 765 860 Buy 13,856 11.7 15.7 22.5 64.8 48.5 33.8 3.5 2.8 2.4 12.7 15.6 19.0 12.1 14.7 19.1
Source: Company, ICICI Direct Research

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RATING RATIONALE
ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorises them as Strong
Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is
defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICI Direct Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research Page 9

ANALYST CERTIFICATION
We /I, Sanjay Manyal, MBA (Finance) and Kapil Jagasia, CFA, MBA (Finance), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this
research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific
recommendation(s) or view(s) in this report.

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ICICI Securities Ltd | Retail Equity Research Page 10