Zydus Wellness may give 20% returns in next one year

Zydus Wellness began its journey in 1988 as India’s leading consumer wellness company with the launch of the country’s first zero calorie sugar replacement product called Sugar Free. Since then, the company has grown into a business spanning the entire wellness spectrum with seven powerful brands namely: Sugarlite, Complan, Sugar Free, Glucon-D, Everyuth, Nycil and Nutralite. Sugar Free aims to replace the sugar in the food, but not the sweetness so one can remain healthy without making any drastic changes in the habit. Catering to varied consumer needs, there are three different variants, namely Sugar Free Gold, Sugar Free Natura, and Sugar Free Green. On the other hand, Complan health drink aids in children’s mental and physical development by improving immunity and all round growth. Glucon-D is the leading brand in the powder concentrate category assisting in instant energy. Nycil is a leading brand in the prickly heat powder category with 100% consumer awareness. SugarLite is smart sugar made from a blend of sugar and stevia providing the taste of sugar and making it 100% natural and with 50% less calories. To provide customers with a healthier alternative to butter, Nutralite is the country’s leading brand in the category of table spreads. Nutralite Mayonnaise launched in 2018 is now looking to leverage its brand equity to drive growth in the future. Everyuth, which was established in 1991, is a pioneer leading brand in the skin cleansing products range. The brands in its range include the Everyuth Scrub, Everyuth Tan Removal and Everyuth Face Pack as its main offerings. The first quarter of the current financial year of 2023 has turned out to be a normal year after being impacted by the pandemic for the last two consecutive financial years. With the timely arrival of the summer season, the summer heavy brands of the company such as Nycil and Glucon D witnessed resurgence in demand clocking strong double digit growth. Though inflation was a concern during the last quarter of FY 2022, the company is seeing easing of inflation and prices of palm oil and packaging materials for the first quarter of the current financial year 2023. Zydus Wellness registered a strong growth of 17.8% in net sales on a consolidated basis. The e-commerce channel continued its growth momentum during the quarter contributing 6.5% of sales while it was 5.9% for similar comparable quarter of last financial year. The gross margins improved by 352 points as a percentage to net sales on the back of price increase, cost improvement measures and excellent product mix. The Q1 FY23 also saw a significant milestone for the company with the overall availability of products in over 2.5 million stores, with an equal split between urban and rural distribution. Other powerful brands of the company such as SugarLite, Nycil, Everyuth, Complan, Nutralite, Glucon D, etc doing well and also well positioned to improve margins substantially in the next few quarters. The fund managers and analysts are bullish on the Zydus Wellness stock currently quoting at Rs 1,600 to appreciate by 20% in the next one year time frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.