Sharekhan's research report on Zydus Wellness
Zydus wellness Limited’s (ZWL’s) Q1FY2024 performance was affected unseasonal rains (impacting sales of summer products) and sweeteners registered a lower offtake resulting in flat revenues and a sharp fall in margins. Revenue (ex-Glucon D) grew in double digits (with volumes rising 4.5%); management is confident of growth recovering in quarters ahead with leadership positioning in most of the categories. ZWL eyes OPM of 17-18% over the next two years driven by improved mix and better operating leverage. Aim is to reach OPM of 20% over the next 4-5 years.
Outlook
Stock has underperformed in the past one year and trades at 25x/20x its FY2024E/FY2025E earnings. We maintain a Buy recommendation on the stock with a revised PT of Rs. 1,654.
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