Zydus Wellness Ltd. share price target

Zydus Wellness Limited (ZWL) has acquired 100% stake in Comfort Click Ltd (CCL), which operates in UK and major European markets. This marks ZWL’s first overseas acquisition and its entry into the Vitamins, Minerals and Supplements (VMS) segment.

Zydus’ acquisition of UK-based Comfort Click broadens its footprint across the UK, EU and USA. The transaction positions it to scale up its wellness range globally, a strategic step toward building a diversified, consumer-focused beauty, health & wellness portfolio.

ZWL’s Q1FY26 numbers were soft, with muted revenue growth and lower margins that dragged down PAT. Consolidated revenue grew by 2.4% y-o-y to Rs. 861 crore, in line with our expectation of Rs. 858 crore.

Zydus Wellness Limited’s (ZWL’s) Q3FY25 numbers were mixed with revenue beating estimates and growing by 14.6% y-o-y to Rs. 462 crore (versus expectation of Rs. 435 crore), while OPM stood flat y-o-y at 3.1% and missed expectations of 5.8%. Volume growth stood at 4.8%.

Q3FY25 sales came in 2% above consensus while EBITDA was 2% lower due to 15bps lower-than-expected margins

Zydus Wellness Limited’s (ZWL’s) Q2FY2025 numbers were mixed with revenue growing by 12% y-o-y to Rs. 493 crore (versus Rs. 475 crore expected), while OPM stood flat y-o-y at 4% (against expectation of 5.3%). Adjusted PAT came in at Rs. 16 crore.

We maintain a Buy on Zydus Wellness Limited (ZWL) with an unchanged PT of Rs. 3,000. Stock has run up by 32% since our upgrade to Buy on May 14, 2024.

Sales (+20%) were 7% higher on heatwave but EBITDA was in line with Bloomberg consensus. We forecast +13% sales growth in FY25

AMBER: Persistent near-term challenges; cut to SELL. CPI and IIP: Still some pain points on inflation. Credit Composition: Study on personal loans. HMCL: Healthy quarter but positives priced in. TMX: Improving order outlook; maintain HOLD. BANDHAN: Recovery on track. IGL: Legacy UP, new GAs can offset slowdown, reiterate BUY. ZYWL: Seasonally weak quarter

Flattish volume growth in Q2 owing to muted performance in glucose and sweetener categories

Zydus witnessed a decent performance with double-digit revenue growth (~5% volume growth), excluding the impact of unseasonal rains (~1% YoY reported revenue growth) on Glucon D brand which has higher salience in Q1. Nycil, Nutralite and Everyuth exhibited a good performance, while Complan witnessed good consumer offtakes.

Q4 revenue grew 11.4% YoY on the back of continuous price hikes; volume growth muted at 4%

Zydus reported a decent revenue growth of ~11% YoY with volume growth of ~4% YoY. Gross margin was flat YoY at 51% in Q4 despite significant dairy inflation (still below FY21 levels). Price hike of 7.8% has been implemented to recover gross margins further (better mix and moderation in dairy inflation are other drivers).

Zydus reported a decent (though below potential) top-line. Flat volume growth despite ~7% price hike and higher distribution expansion benefit (faster than peers), has been underwhelming.

Zydus reported a decent (though below potential) top-line and volume growth prints of 12% and 5%, respectively. Gross margins were down 490bps YoY due to sharp inflation in milk prices and weak product mix.