Zydus Wellness (531335) Q1 24/25 earnings summary

Executive summary

• Achieved highest-ever quarterly sales with consolidated net sales growth of 20% year-over-year, driven by 17.1% volume growth and strong rural demand outpacing urban; core brands and categories performed strongly.

• Personal care segment grew 41.8% and food & nutrition segment grew 15% year-over-year, supported by favorable summer and new product launches.

• Continued leadership in 5 out of 6 categories, with market share gains in Glucon-D, Sugar Free, and Everyuth; several new products launched and more planned.

• Board approved unaudited standalone and consolidated financial results for the quarter ended June 30, 2024, following Audit Committee review.

• Trading window remains closed until August 5, 2024, reopening on August 6, 2024, for insiders.

Financial highlights

• Net sales reached ₹8,391 million, up 20% year-over-year; consolidated revenue from operations for Q1 FY25 was ₹8,410 million, up from ₹7,021 million in Q1 FY24.

• EBITDA increased 33.3% year-over-year to ₹1,553 million; net profit after tax rose 33.8% to ₹1,477 million.

• Adjusted PAT grew 39.6% year-over-year, excluding exceptional items and one-time deferred tax effects.

• Gross margin improved by 314 basis points year-over-year to 55.5%; gross margin value up 26.7%.

• Earnings per share (consolidated, basic and diluted) for Q1 FY25 was ₹23.21, up from ₹17.35 in Q1 FY24.

Outlook and guidance

• Management expects to maintain double-digit revenue growth and targets EBITDA margins of 17%-18% over the next two to three years, up from current 13%-14%.

• CapEx for FY 2025 planned at INR 30-35 crore, funded through internal cash flows; no large CapEx or new debt planned.

• Focus on accelerating growth of core brands, portfolio diversification, and international expansion; targeting 8-10% of revenues from international business in the next 4-5 years.

• Plans to increase direct store reach from 2.9 million to 3.5 million and expand rural distribution.

• Revenues and profits are typically higher in the first and last quarters due to seasonality; Q1 performance is not representative for the full year.