Sharekhan recommended Hold rating on Zydus Wellness with a target price of Rs 1410 in its research report dated May 28, 2019.
Sharekhan's research report on Zydus Wellness
Q4FY2019 comparable revenue growth of Zydus Wellness moderated to 7% from 11-14% in some of the earlier quarters due to slowdown in domestic consumption. Heinz reported revenue of Rs. 265 crore in two months of consolidation. Comparable OPM decelerated to 14-15% from 25.4% in Q4FY2018 due to higher spends behind media activities. OPM of Heinz stood at around 20%. We expect consolidated revenue (including Heinz) to report high single digit on comparable basis; while OPM is expected to stand at 20% in FY2020.
Funding of acquisition through debt:equity and slowdown in domestic consumption to result in significant EPS dilution; Downgraded our recommendation to Hold with a revised PT of Rs. 1,410.
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