Firstcall Research is bullish on Zydus Wellness and has recommended buy rating on the stock with a target of Rs 930 in its November 19, 2015 research report.
Firstcall Research’s report on Zydus Wellness
Zydus Wellness Ltd is serving the health and fitness conscious consumers of India since 1988. The company has been a niche and significant player in this growing market with its portfolio of health care brands viz. Sugar Free, everyuth, Nutralite and Actilife. Net profit for the Sep quarter rose by 6.63% y-o-y to Rs. 291.10 million from Rs. 273.00 million, when compared with the prior year period. During the quarter, net sales at Rs. 552.30 million grew by 4.35% as against Rs. 529.30 million in the corresponding quarter of the previous year. In Q2 FY16, EBIDTA is Rs. 300.30 million as against Rs. 283.10 million in the same 2nd quarter of the previous year, grown by 6.08%.
Outlook and Valuation
At the current market price of Rs. 820.55, the stock P/E ratio is at 26.64 x FY16E and 24.38 x FY17E respectively. Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs. 30.80 and Rs.33.66 respectively. Operating profit and PAT of the company are expected to grow at a CAGR of 8% and 8% over 2014 to 2017E respectively. On the basis of EV/EBITDA, the stock trades at 22.00 x for FY16E and 19.66 x for FY17E. Price to Book Value of the stock is expected to be at 6.59 x and 5.72 x respectively for FY16E and FY17E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. Hence we recommend ‘BUY’ in this particular scrip with a target price of Rs.930.00 for Medium to Long term investment.
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