Zydus Wellness Targets 17-18% Ebitda Margin By FY27
The company expects double-digit revenue growth over the next two to three years, according to its CEO Tarun Arora.
Zydus Wellness, a leading player in the health-focused consumer goods segment, is confident of achieving up to 18% EBITDA margin by FY27, according to its CEO Tarun Arora.
“We want to get back to a 17% to 18% EBITDA margin over the next couple of years. We've been able to consolidate and improve our gross margins and there is still scope for building another 1% to 2% gross margin in the next couple of years. If we continue to drive our growth ahead of our costs, I do see a scope for building an opportunity around operating leverage, which should help us improve our EBITDA margins,” he told NDTV Profit last month.
The company's EBITDA margin fell from 17% in FY22 to 13.2% in FY24. However, EBITDA margin recovered to 14% in FY25.
He cautioned that the improvement may not be linear due to potential disruptions from geopolitical and environmental factors. “Today, there are more risks than a decade back because of the kind of disruptions, geopolitics and stuff that we are facing. You just can't prepare for it," he added.
Despite a recent slowdown caused by a poor summer impacting seasonal product sales, Arora is optimistic about the overall demand environment, predicting a 100 to 200 basis point improvement across the industry, supported by good monsoons and government initiatives.
Zydus has seen its volume growth outpacing competitors. The top executive attributes this success to a strong focus on distribution, particularly in rural areas. While rural India accounts for roughly 30% of its business, its products are available in nearly 1.5 million rural outlets, representing half of its total distribution reach.
The company is targeting double-digit revenue growth over the next two to three years. It is banking on a dual strategy for rural and urban markets.
"On rural markets, we are quite positive and we continue to increase our investments as well as our distribution," he said.
In urban centres, the strategy is shifting to embrace new consumer habits, with a significant focus on the rapid growth of quick commerce platforms. "We believe that urban demand will behave very differently from rural," he explained. Arora added that the company is adapting to it with an "omni-channel approach to cater to this demand."
Zydus Wellness Share Price Movement
Shares of Zydus Wellness surged up to 10.66% to an intraday high of Rs 2,155.9 apiece in morning trade on Wednesday, a day after True North divested its 7.27% stake in the company. Parag Parikh Financial Advisory Services (PPFAS) mutual fund bought the shares.
The stock pared some of its early gains to trade 5.51% higher at Rs 2,055.4 apiece on the NSE at 12:43 p.m., while the benchmark Nifty50 stood at 0.26% lower at 24,788.9.
