Target: ₹205CMP: ₹200Jyothy Labs’ Q1-FY27 earnings print was sharply below the JMF/consensus estimate due to soft revenue (+3 per cent YoY) performance and steep RM inflation-led pressure on gross/EBITDA margin, especially in Home Care and Fabric Care. LTL revenue growth (excluding Pril and Fa) was 8.1 per cent YoY with a volume growth of 5.3 per cent YoY, which is also relatively weaker compared to larger HPC peers within our coverage universe.High competitive intensity, lack of commensurate price hike and RM inflation led to sharp and much higher margin compression versus peers. Management expects double-digit sales growth (excluding Pril) in FY27; margin pressure to sustain in Q2-FY27 and gradual recovery to be seen from Q3-FY27 onwards.While execution on Fabric Care has improved, more work needs to be done to strengthen its position and accelerate growth in other core categories, which we believe would also entail higher investments. Although valuations are not demanding, earnings visibility remains weak, and FY27 guidance does not suggest material outperformance versus peers.Factoring in a weak Q1-FY27, we are trimming the target multiple to 23x (24x earlier) and cutting FY27/28E by 32/16 per cent, yielding a revised TP of ₹205 (earlier ₹230); downgrade to Reduce (from Add). The pace of recovery in margin, any M&A activity, and the outcome of arbitration proceedings versus Henkel would be the key events to watchPublished on August 13, 2026