Sharekhan has given Buy recommendation for Zydus Wellness with a target price of Rs. 2300 in its research report issued on Feb 01, 2021
Sharekhan’s research report on Zydus Wellness
Zydus Wellness Limited (ZWL) posted strong performance in Q3FY2021 with revenue and operating profit growing by ~15% and ~33%, respectively (OPM expanding by 176 bps); lower interest cost led to PAT standing at Rs. 29 crore versus Rs. 9 crore in Q2FY2020. Excluding Nutralite, all brands reported strong double-digit revenue growth in Q3. Nutralite business recovered to 90% of pre-COVID level and will reach 100% in Q4. Improving penetration of Complan, higher traction for Sugarfree and Glucon D along with new products performing well and improved growth of Everyuth brand coupled with distribution enhancement will be key revenue drivers in the near term.
With improving growth prospects in key brands and deleveraged balance sheet, ZWL is well poised to achieve earnings CAGR of 28% over FY2020-FY2023. We maintain our Buy recommendation on the stock with an unchanged PT of Rs. 2,300.
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