JYOTHYLAB - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📊 Investment Analysis: JYOTHY LAB (₹332)

Investment Rating: 4.0

JYOTHY LAB exhibits many of the hallmarks of a fundamentally sound business with potential for long-term value creation. Let's unpack the numbers and trends to see where the opportunities and caution flags lie

💹 Fundamental Strengths

ROCE: 25.1%, ROE: 19.4%

✅ Very healthy returns — reflects strong capital efficiency and management effectiveness.

PEG Ratio: 0.98

Fairly valued based on growth. PEG < 1 generally indicates a reasonable price for expected earnings growth.

Debt-to-Equity: 0.03

Extremely low leverage — shows financial prudence and stability.

Dividend Yield: 1.05%

Modest dividend, but steady — not a major income play, more a growth+stability candidate.

⚖️ Valuation & Technicals

Current P/E: 32.7 vs Industry P/E: 23.5

Slight premium, but acceptable given the company’s strong ROCE/ROE.

Book Value: ₹55.8, EPS: ₹10.1

Price-to-book is ~6, and Price-to-earnings is in premium zone — not cheap, but not overheated.

DMA 50: ₹344, DMA 200: ₹377

Price is below both DMAs — signifies technical weakness, possible accumulation zone developing.

RSI: 37.3, MACD: -1.98

RSI near oversold territory; watch for trend reversal confirmation.

Quarterly Profit Dip (▼ 1.52%)

Slight drop in PAT — not alarming unless trend continues.

Volume vs Avg Volume: Slightly lower

Indicates lack of strong momentum — good time to evaluate entries rather than chase price.

🎯 Ideal Entry Price Zone

Entry Range: ₹290–₹315

This aligns with technical supports and offers margin of safety.

Look for confirmation via MACD crossover or RSI recovery toward 45–50.

🛣️ Exit Strategy / Holding Period

If you're already holding

Holding Period: Long-term (2–5 years) based on strong fundamentals.

Watch For

Continued ROE/ROCE consistency

EPS growth aligning with PEG ratio moderation

Stability in dividend payout and volume expansion

Exit Approach

Target range: ₹420–₹475 assuming growth resumes and technical resistance is breached.

Consider partial profit booking if RSI crosses 70 or P/E exceeds 38–40 without earnings support.

📌 Verdict

JYOTHY LAB is not a deep value play, but it ticks the boxes for a quality compounder with steady fundamentals and low debt. Ideal for long-term investors who prioritize capital efficiency and consistent growth.

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