Sunday, June 28, 2015

Jyothy Labs - Fastest growing Indian FMCG - Buy

Jyothy Laboratories Limited is an India-based fast moving consumer goods (FMCG) company. The Company is principally engaged in manufacturing and marketing of fabric whiteners, soaps, detergents, mosquito repellents, scrubber, bodycare and incense sticks. The Company is organized into four business segments: Soaps and Detergents, Home Care, Laundry services and Others. Soaps and Detergents include fabric whiteners, fabric detergents, dishwash bar and soaps including ayurvedic soaps. Home Care products include incense sticks, dhoop, mosquito repellents and scrubber.

Laundry services include dry-cleaning and providing linen on rental. Others include body care, tea and coffee. Its fabric care product portfolio includes brands, such as Henko Stain Champion, Mr. White, Ujala Stiff & Shine, Morelight, Chek & Speed. Its home care brands include Maxo, Exo Floorshine and Maya. Its Personal care brnads include Margo, FA and Neem Active Toothpaste. Its Dish Wash brands include Exo and pril.

After the Henkel acquisition, Jyothy Laboratories has been successful in creating six power brands for itself—Ujala, Henko, Maxo, Pril, Exo and Margo. At one shot, a three-brand company leapt into the big league with six power brands, which will be key in driving revenues and innovation.

In June last year, Jyothy Laboratories relaunched Henko, which involved doing on-ground tie-ups and better placement of its products to capture the target markets. The awareness increased the demand for Henko products. The strategy seems to have worked because Jyothy Laboratories has been able to clock healthy growth of 18-20% in the soaps and detergents segment in the past two quarters.

Technical Analysis :

 The stock has gained almost 21 per cent so far this month. Volumes have been increasing in the past three trading sessions. The relative strength index on the daily chart has entered the bullish zone from the neutral region. The weekly RSI is featuring in the bullish zone supporting the medium-term uptrend. Similarly, price rate of change indicators are featuring in the positive area signalling buying interest.

Our Recommendation :

The stock has potential to break the resistance and reach the price target of Rs.400 by Dec 2015. Buy the stock with a stop-loss at ₹272.

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