Buy Zydus Wellness; target of Rs 1740: Sharekhan

Sharekhan is bullish on Zydus Wellness has recommended buy rating on the stock with a target price of Rs 1740 in its research report dated May 17, 2023.

Broker Research

May 18, 2023 / 23:19 IST

Buy

Sharekhan's research report on Zydus Wellness

Zydus wellness Limited’s (ZWL’s) volume growth sequentially improved to 4% in Q4FY2023 vs. flat sales volume in Q3FY2023 on account of recovery in consumer demand. Revenue grew by 11.4% y-o-y to Rs. 713 crore. Volume growth is expected to improve in the quarters ahead. The decline in input prices and price hike of ~8% aided gross margins to remain flat at 50.8% in Q4 (improved by 696 bps q-o-q). Management expects gross margins to cross FY2022 levels of 51% in FY2024 and improve ahead in FY2025. WHO’s new guidelines against the use of non-sugar sweeteners to control the use of weight or reduce weight are unlikely to have any impact on the traction of Sugarfree products in the near term.

Outlook

The stock has underperformed in the past one year and is trading at 24x/20x its FY2024E/FY2025E earnings. We maintain our Buy recommendation on the stock with an unchanged PT of Rs. 1,740.

For all recommendations report, click here