Jyothy Labs (JYOTHYLAB)

FairStock Score: 60/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 2/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• Best-in-class profitability: ROE of 24.78% and ROCE of 37.11% indicate strong franchise economics.
• Very low leverage with Debt/Equity of 0.04, supported by a robust Altman Z-Score of 5.62.
• High promoter holding of 62.89% aligns owners with minority shareholders.
• Positive free cash flow of ₹150 Cr despite operating headwinds shows the business still generates cash.
• Piotroski score of 7/9 suggests balance sheet and operational quality remain intact.

Concerns

• Growth has stalled: sales growth is just 1.96% and profit growth is negative at -7.98%.
• Valuation is expensive relative to fundamentals: P/E of 26.95 and P/B of 6.86 versus Graham Number of ₹88.95.
• Negative margin of safety of -184.94% and DCF value of ₹23.91 imply the market is paying far above conservative intrinsic estimates.
• Shareholder income is thin: dividend yield of only 1.38% and FCF yield of roughly 1.6% limit downside support.

AI Analysis

Let me run through the numbers as I always do. Jyothy Labs is a household products business with a durable-looking franchise: it earns 24.78% on equity and 37.11% on capital employed. With debt/equity of just 0.04 and an Altman Z-score of 5.62, this is financially solid. Promoters own 62.89%, so the owner-operator bias is aligned with minority holders. A Piotroski score of 7/9 confirms that fundamentals are still reasonably healthy. Free cash flow of ₹150 Cr gives it capacity to pay the 1.38% dividend and stay conservative. But I am buying a business at a price, not just a franchise. At ₹258.45, the market caps the company at ₹9,307 Cr. For that, you get a P/E of 26.95 and a P/B of 6.86. The Graham number — my rough anchor for conservatism — is only ₹88.95. Even the DCF figure is just ₹23.91. That means today's price has no margin of safety; in fact, it is deeply negative at -184.94%. A steady household brand can be a good holding, but only if purchased at a sensible price. Here, the operating picture is also wobbling: sales grew under 2%, and profit fell nearly 8%. The latest quarter's ₹81 Cr profit on ₹740 Cr sales shows the business still earns, but it is not growing like a fast grower. So what do I do? I wait. The moat seems present, but valuation and growth do not combine to create a compelling buy. I would monitor whether sales and profit get back to sustained mid-single-digit growth, and whether management keeps returns high while using cash wisely. If the price falls into a wide margin of safety, this could become interesting. For now, it is a good business at an inadequate price.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer