Zydus Wellness Q3 Results Review - Decent Revenue Print, Margins Drag: ICICI Securities

ICICI Securities Report

Zydus Wellness Ltd. reported a decent (though below potential) top-line. Flat volume growth despite ~7% price hike and higher distribution expansion benefit (faster than peers), has been underwhelming. Positives are:

1. continued market share gains in the core portfolio (GluconD, Sugar Free, Nycil and Everyuth),

2. moderation in market share loss in Complan (category growth constrained in last two years).

Input cost pressure peaks out (except milk); gross margin improves sequentially. With double-digit growth potential across its most brands, distribution expansion benefits and developments in focused international geographies are key legs of growth in the medium term.

We like the new product development strategy aimed to address some key challenges. We appreciate the research-backed focus with an intent to create problem solution products.

Zydus Wellness also expanded its direct reach which will allow it to participate in larger categories. That said, execution improvement and macro tailwinds in tandem, appear a necessity for performance.

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