Jyothy Labs’ operating margin halves as West Asia crisis, Henkel exit hurt

Household and personal care products maker Jyothy Labs is facing a double blow as higher raw material costs due to the West Asia war and the loss of its Pril and Fa licensing deal weigh on profitability. The impact was visible in the April-June quarter (Q1FY27), with profitability from its core operations nearly halving from a year earlier.

Despite taking a blended 4-4.5% price hike in the June quarter, the company's operating Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin declined sharply to 8.4%, from 16.5% a year ago. The company's performance was also hurt by German partner Henkel AG's decision in May to walk away from a 15-year licensing deal for the Pril and Fa brands.

“The price increases taken towards the end of March and in April were not sufficient to offset the unusually high raw material and packing cost inflation,” chairperson and managing director M. R. Jyothy said in an analyst call on Wednesday.

She cautioned that raw material and packaging costs are unlikely to come down immediately. “Any benefit from lower crude-linked inputs is likely to be visible only gradually and more meaningfully from October, provided commodity prices remain stable,” she said.

The Ujala maker reported a revenue of ₹773 crore in the quarter, up 3% from a year ago. Excluding Pril and Fa’s effect, the company reported value growth of 8.1% and volume growth of 5.3% during the quarter. For the full financial year 2027 (FY27), the Mumbai-based company expects double-digit growth, excluding the Pril business, Jyothy said.

The company's net profit more than halved to ₹47.6 crore, from ₹96.8 crore a year ago.

The conflict in West Asia caused a sharp volatility in global crude oil prices, which surged past $100 per barrel as the US-Iran war escalated. Jyothy Labs has a crude-linked portfolio with products like detergents. Prices of linear alkyl benzene, used in making laundry powders and dishwashing liquids, rose 5% quarter-on-quarter and 15% year-on-year in the April-June quarter, according to analysts at Nomura Group in a 15 June report.

The company said that fabric care and homecare makes up 90% of its business.

The company also restructured its operations after Henkel's exit. Jyothy Labs has moved from a 5-segment reporting model to a three business segment model- fabric care, home care and personal care. “We believe this revised structure gives investors a clearer and more meaningful view of how we manage the business, allocate capital, drive innovation, and pursue long-term growth,” she said.

Fabric care, the company’s largest segment, reported a 10% volume growth and a 14% value growth during the quarter.

The company also said it is in litigation over Henkel’s exit, but did not elaborate on the matter. “There is no specific clause which requires them to wait for a certain period, but the matter is before the court and, hence, we would not be able to comment beyond this,” the management said.

Jyothy Labs' stock settled 2% lower at ₹200 on the National Stock Exchange on Wednesday, and is down 28% year to date.

Post-Henkel plans

The company had outlined how it plans to grow after the sudden exit of its star product Pril diswashing liquid. The company has already launched Exo dishwash liquid which has “done reasonably", as per expectation, according to the management.

The company believes that new product launches and marketing efforts will help it grow during the year. “We will be creating more products, and more products that are better in terms of margin is well on the way...rest assured, that we'll be joining others also in their parties,” Jyothy said.

She added that the company expects to get back on the growth track as quickly as possible.

“Our endeavour is to deliver double digit revenue growth, from current quarter itself….high single digit is the volume growth that we are expecting through the year."

Jyothy Labs has been trying to diversify its product portfolio, reducing its dependence on crude-related products to drive growth. “There is a lot of work which is happening in diversification and reducing the dependence on crude-linked raw material and our innovation gives us scaling up of innovation, new products, etc. gives us confidence, and that, the margin recovery would happen,” she said.

Analysts at Equirus Securities called the results “a miss on all fronts”, adding that the exit of Pril as well as input-cost inflation hit the company hard. In a note dated 9 May, analysts at JM Financial said the termination of the Henkel partnership would weigh on the company’s performance.

“Pril accounts for 25–30% of dishwash sales, which translates to 8–10% of JYL’s overall sales (higher salience in overall EBIT as Pril liquids is better margin business than Exo) whereas the contribution of Fa is not significant,” the note said. "In the near term, the non-renewal of the licence is negative and will have an impact on JYL’s business financials.” Pril was the premium brand and (market share of c. 13%) was the anchor brand in liquids, while Exo (market share of c. 14%) operated in bars, the report said.

“We believe JYL is successfully defending its ground in a fragmented market, but its inability to take aggressive price hikes without sacrificing volume impairs its near-term margin profile,” analysts at ICICI Securities said in a May 2026 note.