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ICICI Securities Report
Zydus Wellness Ltd. reported a decent (though below potential) top-line and volume growth prints of 12% and 5%, respectively. Gross margins were down 490 basis points YoY due to sharp inflation in milk prices and weak product mix.
Continued brand investments and higher other opex lead to dismal Ebitda margin print of 3.8%. We note that Zydus Wellness probably has higher distribution expansion benefit (compared to peers), which is not getting reflected in headline growth numbers.
With double-digit growth potential across its most brands, distribution expansion benefits and developments in focused international geographies are key legs of growth in the medium term. We like the new product development strategy aimed to address some key challenges.
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