The company is also aiming for a top line growth of 18-20 percent for FY15.
Mumbai-headquartered company Jyothy Laboratories maintains its EBITDA margins of around 14-15 percent for FY15, says Joint MD and CFO K Ullas Kamath. The EBITDA growth of the company is likely to improve to 35 percent driven by the global sell-off in crude prices which led to fall in raw material prices.
In an interview to CNBC-TV18, Kamath says the company will mostly be in line with all its expectations. It expects a top line growth of 18-20 percent for FY15, he adds.
Below is verbatim transcript of the interview:
Q: We do understand that you were estimating a top line growth of 20 percent with an earnings before interest, taxes, depreciation, and amortization (EBITDA) growth of 13-14 percent for FY15. Are you in line to achieve that and if so by how much?
A: Yes, we should be in line with our expectations but only the EBITDA would be 35 percent more than what we are expecting. This is mainly because of the reduction in crude price and also resultant reduction in the raw material prices.
Our top line growth should be about 18-20 percent the way we have told in the past and we are in line with that. The EBITDA margin has been improved only because of the crude price. So, it should be about 35 percent growth on the EBITDA margin for the year March, 2015.
Q: Are your margins 35 percent or your EBITDA growth?
A: Yes, EBITDA growth is 35 percent.
Q: Where is the overall number for margin in terms of percentage likely to settle at and what kind of volume growth do you think you can deliver?
A: From our current year, volume growth will be about 12 percent, that is for the year ending March 31, 2015 and EBITDA margins should settle around 14.5-15 percent and this what we had given the guidance so, we are there with the numbers and for the next year we are working very hard to get the numbers.
Q: When you say your EBITDA would increase sharply because of fall in raw material prices, do you think you have the pricing power in this environment to not pass this on entirely?
A: Some of our products are very niche like Ujala wherein we have over 75 percent market share so there is no need to pass it on to the consumer but we will be spending money on advertisement to win the category but it also depends on how the competition moves at the market place.
Now we need to be reactive in some of the categories in which we are like detergent powder, mosquito repellent business so, we will be reacting to our competition as an when it is required but as a company we would like to retain at least 50 percent reduction of raw material into the EBITDA and maybe 50 percent we will pass it on by spending the money on advertising also on sales promotions going forward for 2015-16.
Jyothy Labs stock price
On March 05, 2015, at 14:05 hrs Jyothy Laboratories was quoting at Rs 285.80, up Rs 4.70, or 1.67 percent. The 52-week high of the share was Rs 314.00 and the 52-week low was Rs 171.95.
The company's trailing 12-month (TTM) EPS was at Rs 7.93 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 36.04. The latest book value of the company is Rs 48.64 per share. At current value, the price-to-book value of the company is 5.88.
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