ICICI Direct: Zydus Wellness’ Distinct Product Portfolio Sees Resilient Performance
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ICICI Direct Report
Zydus Wellness Ltd. posted 13.4% revenue fall given manufacturing, supply chain operations were disrupted in April. However, with manufacturing, supply chain stabilising, June saw double digit growth.
Everyuth, Nutralite were impacted most as demand conditions were muted due to lack of ‘out of home’ activities. Nutralite derives 75% sales from hotel restaurant cafe segment.
Sugarfree saw robust sales growth with increasing health caution. Glucon D, which was impacted in April due to supply constraint, saw a gradual recovery in May and June.Complan saw flat YoY sales growth.
We believe Zydus would have lost market share given Horlicks, Boost (Hindustan Unilever’s brand) saw 5% growth in Q1. It was a seasonal quarter for Nycil.
The brand saw positive grown in May, June. Gross margins fell 356 basis points as Zydus was holding higher skimmed milk powder (SMP) inventory at the start of quarter.
Operating profit was flat and operating margin saw a 310 basis points improvement with 650 basis points, 295 basis points saving in marketing, other overhead spends, respectively.
This saving were partly offset by 282 basis points rise in employee spend. profit after tax rose 10.9% to Rs 89.2 crore due to Rs 6 crore tax reversal.
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