Zydus Wellness shares rise 10% in two days as Motilal Oswal gives 'buy' rating, sees up to 35% upside

Zydus Wellness share price

• Zydus Wellness shares jumped after Motilal Oswal's 'Buy' call
• Motilal Oswal set a target price of Rs 575, implying 35 percent upside potential
• Zydus expands in high-protein and wellness trends through recent acquisitions.

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The shares of Zydus Wellness jumped more than 6 percent to its day's high on January 1 after Motilal Oswal initiated coverage on the stock with a ‘Buy’ call.

The shares of the company hit an intraday high of Rs 483.40 apiece on Thursday, before paring some gains and closing over 2 percent higher at Rs 465.50 apiece. The stock has now risen nearly 10 percent in two days after the bullish report.

Motilal Oswal on Zydus Wellness:

Motilal Oswal on December 31 set a target price of Rs 575 apiece for the shares of Zydus Wellness, implying an upside potential of nearly 35 percent over the December 30 closing price of Rs 424 apiece. The domestic brokerage said that the company is a diversified health and nutrition company with leadership in several consumer wellness categories.

The company’s core portfolio consists of sugar substitutes (Sugar Free), glucose powders (Glucon-D), skincare (Everyuth), functional foods (Nutralite), prickly-heat powder (Nycil), and nutritional beverages (Complan), Motilal noted, adding that Zydus maintains its dominant positions in these core categories.

Recent acquisitions, including Naturell (RiteBite Max Protein) and Comfort Click (VMS portfolio), have expanded the company’s presence across emerging consumption trends such as high-protein snacks, preventive health, and digital-first nutrition, it added.

“The company’s portfolio is aligned with global consumption megatrends, e.g., low/no sugar, high protein, preventive wellness, high energy and on-the-go functional nutrition. Unlike FMCG peers, which are facing user-addition constraints in several core categories, Zydus can leverage its portfolio to keep expanding its user base, particularly for youth and affluent consumers,” Motilal said.

The domestic brokerage said that Zydus has one of the best risk-reward profiles among peers with a similar market cap. “With 70% promoter holding, professional leadership, best corporate background, and presence in futuristic relevant categories, we believe the company deserves a better valuation multiple. The valuation multiple is currently low given its low earnings growth in the past decade (10-year CAGR of 7-8%). With stability in the core portfolio (took initial period for stabilizing sizable acquisition) and promising new growth engines, we expect Zydus to deliver much superior earnings growth than it delivered in the past,” it added.

Motilal expects the firm to post 14 percent organic EBITDA CAGR and 36 percent consolidated EBITDA CAGR during FY25-28. The stock is at 22x P/E and 16x EV/EBITDA FY28E, a 30-35 percent discount to other FMCG peers, and offering the best risk-reward profile in the sub-Rs 15,000 crore market-cap consumer universe, it said.

Zydus Wellness share price:

After rising more than 6 percent to its day’s high, the stock pared some gains to close around 2 percent higher in the green. The stock has gained over 9 percent in the past five days, and more than 7 percent in the past one month. This came after the stock surged 15 percent in the past six months.

The stock’s P/E ratio currently stands at 45, and has a market capitalization of Ts 14,793 crore.

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