Buy For Zydus Wellness Ltd Target Rs.2,520 - Sushil Finance
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Zydus Wellness Ltd. (ZWL) recently announced its performance for the quarter ended March 31, 2022. The top-line & EBITDA were in-line with our estimates & bottom-line was moderately above our estimate. Following are the key highlights.
Highlights from Q4 FY22 & FY22
* During the quarter, the top-line grew by 5.6% (volume growth 0.4%) and during the fiscal ended March 31, 2022, the top-line grew by 7.3% (volume growth 2.3%). The Management stated that the company has taken a price-hike of 7.0-7.5%, however, the quarterly performance showcase the benefit of 5.3% and the lingering impact of the same will be seen in Q1 FY23.
* According to the Management, the price-hikes and cost control measures resulted into gross margin expansion of 265 bps on sequential basis, however on an annual basis, the margin continues to remain under pressure due to rising inflation. The gross margin on an annual basis, fell 374 bps during the quarter.
* On the international front, the company continued to expand its footprint during the fiscal by foraying into new geographies like Hong Kong, Lebanon, Zimbabwe, Muscat, Ethiopia and Australia. SugarFree franchise & Complan constitute 93% of the overall business and top 5 markets constitute ~80% of the business. The international business continued to post high double digit growth. The Management aims at turnover of Rs.100 cr in FY23 and is targeting 8-10% of revenues in 4-5 years.
* At the brands level, Everyuth brand outperformed the category growth and registered strong double digit growth during the quarter. SugarLite continued to post a high double digit growth during the year. In the dairy and spreads category, Nutralite delivered a strong double digit growth during the year. The brand’s mayonnaise business has doubled its growth over the last couple of years.
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