Sharekhan's research report on Zydus Wellness
Zydus Wellness Limited’s (ZWL’s) Q2FY2024 numbers were soft as delayed/uneven rains and slow rural demand recovery hit offtake, resulting in just a 2.4% revenue growth. Deferred tax liability on non-cash items dragged PAT by 30% y-o-y; OPM was stable y-o-y. Management eyes double-digit revenue growth in the medium term led by wider distribution network, marketing initiatives, innovation and scale up of international business. OPM is expected to rise to 17-18% in the next few years driven by improved mix and better operating leverage.
Outlook
Stock has underperformed in the past one year and trades at 30x/24x/20x its FY2024E/25E/26E EPS. We maintain a Buy on the stock with a revised PT of Rs. 1,800.
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