Sharekhan has given Buy recommendation for Zydus Wellness with a target price of Rs. 2250 in its research report issued on May 17, 2022
Sharekhan’s research report on Zydus Wellness
Zydus Wellness Limited’s (Zydus) Q4FY2022 performance was ahead of our expectation as it managed to post better-than-expected OPM to 22% despite sharp raw-material inflation. Revenue grew by ~6% with flat sales volume, while adjusted PAT stood flat at Rs. 133 crore. The company gained/maintained market share in most of the product categories (barring Complan). Focus is on sustained gain in market share in key channels. After two years of lull, summer products are gaining good traction with receding COVID-19 risk. Management is targeting double-digit revenue growth over the next two years. The company aims to achieve gross margin of close to 55% and OPM of 20%+ with better revenue mix.
We maintain Buy on the stock with a revised PT of Rs. 2,250. The stock trades at 28.6x/22.8x its FY2023/FY2024 earnings, which is at a discount to some of the large peers.