Sharekhan's research report on Zydus Wellness
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. Volume growth of 8.4% beat industry growth. The HFD category is recovering. ZWL expects to beat category growth of 5-6% in medium to long term. To expand its presence in consumer wellness industry, ZWL is acquiring Naturell (India) Pvt. Ltd. (NIPL), a company in the healthy snacking space for Rs. 390 crore. The transaction is proposed to be funded by cash and is expected to be EPS accretive for ZWL from FY2026.
Outlook
Stock has corrected by 22% since recent high and trades at 32x/25x/22x its FY25E/FY26E/FY27E EPS, respectively. We maintain a Buy with a revised PT of Rs. 2,465.
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