5 August 2020 Jyothy Laboratories (JYL) 1QFY21 results were above our low expectations. Sales growth was up only 4%. Ad-spend reduction of 40% (much higher than peers) drove EBITDA margin beat, despite gross margin being much below expectations. Despite being much smaller than its peers under our coverage, the company has reported mere 2.5% sales CAGR over the past 5 years and neither the management commentary for Jul20, rest of the year or subsequent years indicates a substantial revival to steady-state double-digit sales growth. Double-digit sales growth in FY21E is only because of low base due to 24% sales decline seen in 4QFY20. 1QFY21 standalone net sales grew 4.1% YoY to INR4.3b (v/s est. EBITDA grew 19.4% YoY to INR782m (v/s est.