Zydus Wellness Ltd. share price target

Zydus Wellness Limited's (ZWL) Q2FY2020 performance is strictly not comparable y-o-y due to consolidation of the Heinz portfolio from Q1FY2020. After consolidation of the Heinz portfolio, revenue growth was lacklustre, at 3.6%, on a like-to-like basis due to lower sales of by-products such as ghee and milk trading. Excluding byproducts, revenue grew by ~9%, aided by the steady performance of some key brands. Gross margins and OPM declined y-o-y due to an unfavorable revenue mix (lesser contribution from high-margin products such as Glucon-D and Nycil). The company maintained its...

The stock price of Zydus Wellness Limited (Zydus) has moved up by ~17% post its strong operating performance in Q1FY2020, which gives us a glimpse of the acquisition of Heinz India Private limited (Heinz) being earnings positive by FY2021 (which was earlier expected to be earnings accretive by FY2022). The acquisition will enhance the portfolio of Zydus with strong brands and enhanced distribution reach. However, funding of the acquisition through debt led to some stress on the balance sheet, though working capital has remained...

Zydus Wellness Limited's (ZWL's) Q1FY2020 results are not comparable y-o-y due to consolidation of the acquired Heinz portfolio. ZWL's base portfolio grew by 10% while the Heinz portfolio grew by 20% in Q1FY2020. OPM stood strong at about 20%. The management has indicated at a sustained double-digit growth on a comparable basis and a 200 bps improvement in OPM in the next two years. We have increased our earnings estimates to factor in higher than estimated growth for the Heinz portfolio. In view of improved earning visibility, we upgrade the...

Comparable revenue grew by 7%, while margins stood at 14-15%: In Q4FY2019, consolidated net revenue (including revenue of Heinz for two months) of Zydus Wellness (Zydus) stood at Rs. 416 crore, while comparable revenue grew by 7% due to slowdown in domestic consumption affecting growth of categories such as Sugarfree and scrubs during the quarter. Aggregate revenue for Heinz...

Funding of Heinz India acquisition will be done through a mix of equity and debt in the ratio 1.7:1: Zydus Wellness (Zydus) is planning to raise Rs. 4,075 crore through a mix of preferential allotment of equity shares and issue of non-convertible debentures for funding the acquisition of the entire shareholding of Heinz India Pvt. Ltd. valued at ~Rs. 4,600 crore. The...

Stock moved up by 28% in the past two months: The stock price of Zydus Wellness Limited (ZWL) has moved by 28% in the past two months, inline with strong surge in the FMCG basket. The strong surge in the stock price can also be attributed to pick-up in business fundamentals of the company in the past four quarters. Revamped distribution and new product launches aided the company to maintain a leadership position in key...

Zydus Wellness Ltd. (ZWL) is Ahmedabad based FMCG company, incorporated in 1994. ZWL, a subsidiary of Cadila Healthcare Ltd. the flagship company of the Zydus Cadila Group, operates as an integrated consumer company with business encompassing the entire value chain in the development, production, marketing and distribution of Health and Wellness products. ZWL has been a niche and significant player with its portfolio of flagship brands viz. Sugar Free (sugar substitute), Everyuth (skin care) and Nutralite (health foods). The Company manufactures its range of health and wellness products across three manufacturing facilities one in...

Q3FY17 net sales (net of excise) at Rs 1.03 bn were flat YoY in line with our estimate and once again range-bound in quarterly run-rate of Rs 950-1,100 mn. Despite meaningful investments for category adoption (20% of sales on advertising/distribution over past 10 quarters), the wellness market h..