Jyothy Laboratories gained over 5 percent in the morning on Friday after brokerage firm Macquarie initiated coverage on the stock with an 'outperform' rating. It has a target price for the stock at Rs 250 per share, with a 37 percent upside from current levels.

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The stock rose as much as 5.5 percent to Rs 193.25 per share on the BSE. At 10:40 am, it was trading at Rs 190.30, up 3.93 percent on the BSE, while the S&P BSE Sensex was up 0.3 percent at 38,811.

The product like the company's diverse product portfolio with a presence in mainstay categories that have a long runway for growth on the back of penetration and premiumization.

"The Henkel acquisition and turnaround demonstrate management’s execution skills and gives us confidence in the company's scalability in the long run. Despite not being a market leader in most of the categories, its strategy for differentiated product positioning and investments in power brands is leading to market share gains in key categories," it added.

The brokerage believes its focus on new product launches, higher advertising and promotional spend and IT-led distribution enhancement will boost volume growth.

"We expect an improvement in return ratios driven by improved margin delivery, deleveraging of balance sheet," they said.

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First Published:Apr 5, 2019 11:24 AM IST