We are bullish on Jyothy's long-term growth as it rolls out key brands nationally and expands its laundry business. Excluding the QIP money and the underlying value of its subsidiary, JFSL (laundry business), would result in lower valuation for its FMCG business. Jyothy has underperformed the BSE FMCG Index by 5% in the past three months and offers room for further upside.

Full impact of the price increase of Ujala Supreme will support revenue and profitability growth. Pricing power in Ujala Supreme will underpin volume growth as well;

Launch of Maxo Military will enhance revenue growth. We assume ~Rs600mn revenue from this brand, at ~7% of total sales in FY12e;

Aggressive marketing efforts on Techno Bright (Washing powder) and Exo would translate into improved performance in FY12.

Our estimates are among the highest on the street, led by expectation of superior margins from Ujala Supreme and Maxo. We assign P/E of 18x on core EPS FY12 (Rs14/share - excluding other income from QIP funds) and add Rs28/share QIP cash to derive at a TP of Rs281.

1) Change in our estimates for input costs owing to volatility in crude prices; 2) Inability to attract retail clients in the laundry business; 3) Abrupt reduction in Maxo Military volume on discontinuation of sales promotion; 4) Higher brand building investments and; 5) Lower retail participation for Maxo Military.