Jyothy Labs — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Jyothy Labs reported a mixed Q2 FY26, with revenue growing 0.4% and volume 2.8%, significantly impacted by GST rate revisions in September 2025 which disrupted trade channels. Despite a 210 bps YoY decline in gross margin to 48.1% due to input costs and promotional offers, EBITDA margin was maintained at 16.1%. The company remains optimistic about a demand recovery in H2, targeting double-digit volume growth by year-end, supported by new product launches and a strong cash position of ₹801 crores with zero debt.

Highlights

  • Fabric Care segment delivered 6.1% value growth and high single-digit volume growth, with liquids more than doubling year-on-year.

  • Net cash generation from operations improved to ₹196.5 crores compared to ₹188.9 crores last year.

  • The company maintains a strong cash balance of ₹801 crores and zero debt, positioning it well for growth and innovation.

  • Management expects a broad-based consumption recovery and aims for double-digit volume growth by the exit of this year.

  • New product launches like Dr. Wool and Ujala Young & Fresh have been well-received, with more NPDs in the pipeline.

Concerns

  • Q2 FY26 revenue growth was modest at 0.4% and volume growth at 2.8% year-on-year, primarily due to MRP reductions and promotional offers.

  • Gross margin for Q2 declined by 210 basis points year-on-year to 48.1% due to input cost pressure, price reductions, and consumer offers.

  • The personal care segment was impacted by GST transition in September 2025, leading to nearly flat growth in that month.

  • Household Insecticides segment growth remained muted, with profitability improvement expected to take 4-6 quarters.

  • Net working capital increased to 22 days as of September 30, 2025, from 19 days as of March 31, 2025, due to a shift in channel mix.

Key financials

3 periods

Headline

  • Net Working Capital Days
    22 days
  • Net Cash Generation from Operations
    ₹196.5 Cr

Q2

  • Revenue
    ₹736 Cr
    YoY +0.4%
  • Volume Growth
    —
    YoY +2.8%
  • Gross Margin
    48.1%
    YoY -2.1%
  • EBITDA Margin
    16.1%
  • Operating EBITDA
    ₹118 Cr
  • PAT
    ₹88 Cr

H1

  • Revenue
    ₹1,487 Cr
    YoY +1%
  • Volume Growth
    —
    YoY +3.2%
  • Gross Margin
    48%
  • Operating EBITDA Margin
    16.3%

What they filed

Q4 FY25: revenue up 1.1%, net profit down 2.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ1 FY24Q2 FY24Q3 FY24Q4 FY24Q1 FY25Q2 FY25Q3 FY25Q4 FY25
Revenue687 732 678 660 742 +8%734 +0%704 +4%667 +1%
EBITDA117 135 119 108 133 +14%138 +2%116 −3%112 +4%
Net profit96 104 91 78 102 +6%105 +1%87 −4%76 −3%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentValue Growth (Q2)Volume Growth (Q2)Volume Growth (H1)
Fabric Care6.1%——
Dish Wash-3.8%3.4%—
Personal Care———

Capital allocation

high confidence
  • Debt Debt disclosed
    With a strong cash balance of Rs. 801 crore and zero debt, the Company remains well positioned to fund growth and invest in innovation.
  • M&A Deal Acquisition · Announced

    Actively looking for the right asset to complement existing categories and leverage strengths.

    And on your third question on M&A opportunities and the cash balance. So, as we have mentioned in the earlier calls also, that we are actively looking for the right asset. And we have explored a few of them. And we are in talks with a few of the assets, a few of the businesses. So, as and when it materializes, it will be made known to the streets.
  • Liquidity Cash ₹801 Cr Strong cash balance with zero debt, well-positioned to fund growth and innovation.
    With a strong cash balance of Rs. 801 crore and zero debt, the Company remains well positioned to fund growth and invest in innovation.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · H2 FY26 · High confidence 16%-17%
    We expect EBITDA margin to remain in the range of 16%-17% in the second half, assuming commodity prices remain stable and demand continues to improve.

    — M. R. Jyothy

  • Household Insecticides Segment Profitability Profitability · 4-6 quarters · Medium confidence profitable
    it may take another 4 to 6 quarters for this category, this segment to turn profitable.

    — Pawan Agarwal

  • Personal Care Segment Margin Profitability · a couple of quarters · Medium confidence double-digit margin
    I can indicate that going forward in a couple of quarters, we will be back to double-digit margin.

    — Pawan Agarwal

Tax Rate

  • Effective Tax Rate Tax Rate · FY26 · High confidence 24%-25%
    The effective tax rate for the half-year ended was 25%, compared to 24.2% of FY'25 and is expected to remain in the range of 24%-25% for FY'26.

    — M. R. Jyothy

Working Capital

  • Net Working Capital Days Working Capital · medium term · High confidence 18-20 days
    We expect net working capital to normalize around 18-20 days in the medium term.

    — M. R. Jyothy

Market context

  • Volume Growth Volume · by exit of this year (H2 FY26) · High confidence double digit
    At least by exit of this year, we should aim at double digit volume growth.

    — M. R. Jyothy

What to watch in Q3 FY26

Personal Care Segment Margin

In a couple of quarters
Current Impacted in Q2, contributing to overall margin blip
Target Double-digit margin

Why it matters

Recovery of personal care margins is crucial for overall profitability improvement and reflects the effectiveness of pricing and investment strategies.

I can indicate that going forward in a couple of quarters, we will be back to double-digit margin.

Risks & concerns

  • GST rate revision disruption

    high

    The GST rate revision in September 2025 caused temporary disruption in trade channels, particularly for personal care, leading to nearly flat growth in that month due to de-stocking.

    Management acknowledged

  • Input cost pressure

    medium

    Input cost pressure, along with price reductions and consumer offers, led to a 210 bps YoY decline in gross margin in Q2, with palm oil prices up 14-15% YoY.

    Management acknowledged

  • Competitive intensity in H2

    medium

    The second half of the year is expected to be competitive, with other players like HUL showing aggressive strategies across categories.

    Both acknowledged

  • Muted growth in Household Insecticides (HI) segment

    medium

    Growth in the Household Insecticides segment remained muted, requiring a focus on profitability improvement over the next 4-6 quarters by shifting to profitable formats.

    Management acknowledged

Q&A highlights

8 direct
Personal Care Segment Performance & New Launches (Jovia, Margo) Direct
Margo Neem Naturals is the one that you are talking about and it is doing reasonably well. Now as we see in Q3, we can see good enough improvements in the brand and in personal care. So Jovia and Margo both put together and are delivering for us from Q3 onwards. Yes, the first half was muted, but going forward, both of these brands will start delivering.

Clarifies the performance of new personal care launches and expectations for their combined contribution in H2 FY26.

Asked by Rishabh Shah

Pan-India Expansion Strategy Direct
our revenues from southern India has come down from 40% odd to 33% over the past few years. So we are expanding our product portfolio to pan-India basis. So that's point number one. Point number two, there are many brands, you can take Exo, you can take Pril, you can take Margo. Ujala also now is expanding and going upwards.

Addresses concerns about geographic concentration and highlights the company's successful efforts to build national brands and expand its product portfolio across India.

Asked by Rishabh Shah

H2 FY26 Revenue Growth Aspiration & Competitive Intensity Direct
I can only comment that we are aiming to be back like how we were in the past. So we are trying to do all that it takes for building our brands and making it grow volume wise double digits. At least by exit of this year, we should aim at double digit volume growth.

Provides management's ambitious growth target for the near future despite competitive pressures and outlines the strategy to achieve it through brand building and volume growth.

Asked by Vishal Gutka

M&A Strategy and Cash Utilization Direct
as we have mentioned in the earlier calls also, that we are actively looking for the right asset. And we have explored a few of them. And we are in talks with a few of the assets, a few of the businesses. So, as and when it materializes, it will be made known to the streets.

Indicates active pursuit of inorganic growth opportunities to deploy the significant cash balance, signaling potential future strategic moves.

Asked by Vishal Gutka

Impact of GST Rate Revision on Trade Channels Direct
No, it's difficult to put a number behind this, but there was a general disruption in terms of channel. The order offtake was significantly dropped. And in fact, at the Kirana store level, they had tax paid stock. So they were reluctant to place order until their tax paid stock inventory gets liquidated. And then similarly, the distributors were also, they slowed down their orders.

Explains the specific mechanism of channel disruption and de-stocking caused by the GST change, providing crucial context for the Q2 performance slowdown.

Asked by Umang Shah

Household Insecticides (HI) Segment Turnaround Timeline Direct
it may take another 4 to 6 quarters for this category, this segment to turn profitable. So that's the time it will take in our assessment.

Provides a clear timeline for the profitability turnaround of a challenging segment, allowing investors to track progress.

Asked by Umang Shah

Personal Care Margin Blip and Normalization Direct
I can indicate that going forward in a couple of quarters, we will be back to double-digit margin. Some of the actions that we are taking and the investment that we have made, that would help us accelerate our sales growth in personal care. And the margin should swing back to double-digit.

Explains the reasons for the Q2 margin pressure in personal care and provides a timeline for recovery, which is critical for overall profitability.

Asked by Harit Kapoor

Liquid Detergent Competition from Regional Brands Direct
Like you said, there are local players and for us, we'll invest behind the brand. That's the biggest differentiation. And when it comes from an organized player, it comes with quality. The brands that we have launched, we have to live up to the name. So, the quality that we offer and the price, yes, it has to fetch that price, right? Local players, we don't know. Their quality may be good this time. It may be bad next time. But that's how they operate at cheaper prices. It's a matter of time that consumers understand which is a quality product.

Addresses competitive threats from regional players in a key growth category and outlines the company's strategy to counter it through brand investment and quality differentiation.

Asked by Senthil Manikandan

3 min read 7 chapters

Detailed narrative

Q2 FY26 Performance and GST Impact

Jyothy Labs reported a mixed Q2 FY26, with revenue from operations at ₹736 crore, reflecting a modest 0.4% value growth and 2.8% volume growth year-on-year. The quarter's performance was significantly impacted by the GST rate revision announced in September 2025, which caused temporary disruptions and de-stocking across trade channels, particularly affecting the personal care portfolio, which constitutes about 11% of the business. For the first half of FY26, revenue stood at ₹1,487 crore, with 1% value growth and 3.2% volume growth.

Margin Trends and Outlook

Gross margin for Q2 FY26 was 48.1%, a decline of 210 basis points year-on-year, primarily due to input cost pressure and increased consumer offers. Despite this, the EBITDA margin was maintained at 16.1%, aligning with previous guidance. Management anticipates EBITDA margin to remain in the range of 16%-17% in the second half of FY26, assuming commodity prices remain stable and demand continues to improve. The personal care segment's margin, which saw a blip in Q2, is expected to return to double-digit in a couple of quarters.

Segmental Highlights and New Product Launches

The Fabric Care segment delivered a strong performance with 6.1% value growth and high single-digit volume growth, notably with liquids more than doubling year-on-year. The Dish Wash segment also saw 3.4% volume growth, though value declined by 3.8% due to price corrections. Jyothy Labs introduced Dr. Wool, a premium specialized garment care product, and Ujala Young & Fresh, a fabric conditioner, both of which have been well-received, with more new product developments in the pipeline, particularly within the Fabric Care category.

Household Insecticides (HI) Segment Turnaround Strategy

The Household Insecticides segment experienced muted growth in Q2. The company's strategic focus is on improving profitability over the next 4-6 quarters by shifting away from less profitable formats like coils towards higher-margin products such as liquid vaporizers, Maxo Aerosols, and anti-mosquito rackets. Management is confident that these new formats are showing early traction and will contribute to the segment's turnaround to profitability within the stated timeline.

Capital Structure, Liquidity, and M&A Intent

Jyothy Labs maintains a robust financial position with a strong cash balance of ₹801 crore and zero debt, enabling it to fund growth and innovation. Net cash generation from operations improved to ₹196.5 crore. The company is actively exploring M&A opportunities, seeking assets that complement its existing portfolio and leverage its strengths. Discussions are ongoing with potential targets, indicating a proactive approach to inorganic growth.

Distribution Network and Working Capital Management

The company has significantly expanded its distribution network over the past five years and continues to focus on increasing outlet reach. Net working capital increased to 22 days as of September 30, 2025, from 19 days on March 31, 2025. This increase is attributed to a channel mix shift towards modern trade, e-commerce, and quick commerce, which typically have longer credit cycles. Management expects working capital to normalize to 18-20 days in the medium term.

Market Outlook and Digital Investment

While general trade remained subdued, modern trade, e-commerce, and quick commerce channels maintained double-digit growth. The company's overall channel mix is approximately two-thirds general trade and one-third other channels. Rural contribution to revenue has remained stable at around 40%. Jyothy Labs is increasingly investing in digital mediums and shifting advertising budgets towards digital and rural markets, recognizing their growing importance for future growth.

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