We like JYL’s diverse product portfolio with a presence in mainstay categories that have a long runway for growth on the back of penetration and premiumization. The Henkel acquisition and turnaround demonstrate management’s execution skills and gives us confidence in JYL’s scalability in the long run. Despite not being a market leader in most of categories, its strategy for differentiated product positioning and investments in power brands is leading to market share gains in key categories. We believe its focus on new product launches, higher A&P spend & IT-led distribution enhancement will boost volume growth. We are 9-11% ahead of consensus earnings for the next two years.
Dishwashing has been one of fastest-growing categories for JYL and we expect strong growth to continue on account of market share gains and lower overall penetration in the category. Overall penetration for the category in India is low at ~40%. We expect market share gains to continue due to its strong positioning (Exo and Pril) and distribution expansion.
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We believe a strong premiumization trend in detergents will help the Henko portfolio, which is the main growth driver in fabric care. Henko StainCare has a differentiated product positioning in semi-premium detergents, which we believe is critical for profitability in a highly competitive segment. While the fabric whitener has been facing growth challenges, Ujala brand extensions should drive growth.
Margo has delivered ~23% revenue CAGR over FY12-18, helped by the Naturals category’s buoyancy. We believe strong growth will continue due to the structural trend of naturals demand and geographical expansion. The household insecticides (HI) segm-ent has been under pressure due to strong growth in illegal incense sticks. While JYL has stepped up new product launches like natural agarbathi (incense stick) and gained market share in liquid vapourizers (after launch of Maxo Genius machine), category revival is key.
