ICICI Securities has given Buy recommendation for Zydus Wellness recommended buy rating on the stock with a target price of Rs 2250 in its resear with a target price of Rs. 2250 in its research report issued on Apr 02, 2022

ICICI Securities research report on Zydus Wellness

Research-backed innovation focus with an intent to create problem-solution products/brands is our key takeaway from meeting the Zydus Wellness (Zydus) senior management in Ahmedabad. 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. Given current scale, we liked the focus on technology-led efficiency improvements. We believe the focus on research-based products is what provides longevity to (FMCG) organisations. The results post the acquisition (of Heinz portfolio) have been encouraging notwithstanding the inflation concerns and missed summer sales for the last two years. Besides a strong core, successful brand extensions are aiding overall growth. We especially like the new product development strategy aimed to address some key challenges – SugarLite to address the taste penalty, Complan Nutrigro to regain lost medical connect of the brand. Expanded direct reach will allow it to participate in larger categories. Headwinds in the last two years mask the improvement in underlying operating performance.

Outlook

Our earnings estimates are unchanged. We model revenue / EBITDA / PAT CAGR of 12% / 21% / 27% over FY22-24E. Maintain BUY with a DCF-based target price of Rs2,250. At our target price, the stock will trade at 31x P/E multiple Sept-23E.

More Info

At 10:50 hrs Zydus Wellness was quoting at Rs 1,583.95, up Rs 26.20, or 1.68 percent.

It has touched an intraday high of Rs 1,585.85 and an intraday low of Rs 1,557.00.

It was trading with volumes of 1,931 shares, compared to its thirty day average of 6,217 shares, a decrease of -68.94 percent.

In the previous trading session, the share closed up 3.80 percent or Rs 57.00 at Rs 1,557.75.

The share touched its 52-week high Rs 2,472.85 and 52-week low Rs 1,431.00 on 21 September, 2021 and 15 February, 2022, respectively.

Currently, it is trading 35.95 percent below its 52-week high and 10.69 percent above its 52-week low.

Market capitalisation stands at Rs 10,079.01 crore.

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