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Motilal Oswal Report
The brokerage firm Motilal Oswal has broadly maintained its Ebitda estimates for Zydus Wellness Ltd. for FY27 and FY28.
The valuation multiple is currently low given its low earnings delivery in the past decade (10-year CAGR of 7-8%). With stability in the core business (took the initial period to stabilise a sizable acquisition) and exciting new growth engines, the brokerage expects Zydus Wellness to deliver superior earnings growth vs the past.
The stock is at 23 times FY27 and 18x FY28 EV/Ebitda and models ~11% domestic revenue CAGR and ~20% Ebitda CAGR over FY26-28E.
On a consolidated basis, the brokerage models ~26% revenue CAGR and 37% Ebitda CAGR.
Zydus Wellness' recent initiatives around RiteBite and CC are trending at an exciting pace, both in terms of revenue and operating margin.
Based on SoTP, Motilal Oswal values the India business at 27x FY28E EV/Ebitda and the International one (Comfort Click) at 18x FY28E EV/Ebitda to arrive at a target price of Rs 600 (implied consolidated 23x EV/Ebitda and 30x P/E at FY28). Motilal Oswal reiterates Buy on the stock.
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