Jyothy Labs

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.

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.

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.

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.

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.

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.

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.