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.

Raghav
Equity Advisor

Smart Investor
No.24 Pattamal Plaza
3rd Cross Kammanahalli
BANGALORE 560084

Mobile / Whatsapp - 08105.737.966
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Jyothi Labs - Buy

Investors with medium-term perspective can consider buying the stock of Jyothy Laboratories (Rs 216.6), a household products manufacturer. Since bottoming out in October 2008 around Rs 42, the stock has been on a long-term uptrend. However, after registering a life-time high at Rs 321 in October 2010, the stock reversed direction.

It was on a corrective decline until it found support at its long-term base level in the band between Rs 190 and Rs 200 in early February 2011. This support band is just above the stock's 50 per cent Fibonacci retracement level of its prior up-move. The stock has been taking support from this band consistently since February this year. The stock price movement since then has been a sideways consolidation phase in the broad range between Rs 190 and Rs 240.

On June 17, the stock surged more than 7 per cent with good volumes breaching its 21- and 50-day moving averages as well as its downtrend-line that was in place from late October 2010. The daily relative strength index has entered in to the bullish zone from the neutral region and weekly RSI is rising higher after bouncing higher from 40 levels. Both daily as well as weekly moving average convergence divergence indicators have signalled a buy. The daily price rate of change indicator has entered in to the positive territory indicating buying interest.

The stock has been giving steady returns to investors during the last 1 year and is likely to do better going forward

1 week	2 week	1 month	3 month	6 month	9 month	1 year
Price	241.70	217.65	204.15	212.25	237.50	305.25	282.85
Gain / Loss	-1.63%	9.24%	16.46%	12.01%	0.11%	-22.11%	-15.94%

SMAs

Days	BSE	NSE
30	219.80	219.70
50	214.14	214.03
150	224.93	225.09
200	238.82	238.98

Our medium-term outlook on the stock is bullish. We believe that Jyothy Laboratories has the potential of moving upwards in the medium-term and touch our price target of Rs 260, following a small pause around Rs 240 levels. Investors with medium-term horizon can consider buying the stock with stop-loss of 200 for a target price of 260

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