Anand Rathi's research report on Zydus Wellness
With its Q4 revenue up 10% y/y (vs. the Street’s 5% y/y estimate) and a 45bp expansion in its EBITDA margin to 20.7% (20%), Zydus Wellness posted a healthy quarterly performance. Its personal care range (EverYuth, Nycil) posted a good 23% y/y growth, helped by the upswing in consumption demand while Food & Nutrition posted 6% y/y growth, hurt by price cuts in Nutralite. Management was optimistic of double-digit revenue growth in FY25, led by innovation, distribution and its international foray and expected margin to revert to 17-18% over the next two years, aided by operating leverage and softer input prices. We tweak our FY25e/F26e EPS slightly to factor in the Q4 performance and a lower FY25 tax rate.
Outlook
We retain our long-term view of a double-digit revenue CAGR and margins returning to 18-20% over 2-4 years. We retain our Buy with a higher 12-mth TP of Rs2,150, 33x FY26e EPS (earlier Rs1,910).
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