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, reaching INR 8,391 million, driven by 17.1% volume growth and strong rural demand outpacing urban.

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

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

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

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

Financial highlights

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

• EBITDA margin rose to 18.5% from 16.6% year-over-year; gross margin improved by 314 basis points year-over-year to 55.5%.

• PAT margin increased to 17.6% from 15.7% year-over-year; earnings per share (consolidated) for Q1 FY25 was ₹23.21, up from ₹17.35.

• Advertisement expenses grew 19.1% year-over-year; other expenses rose 27.7% due to strategic consultant costs.

• Standalone revenue from operations for Q1 FY25 was ₹634 million, up from ₹601 million 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 4-5 years.

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

• Near-term margins expected to be lower in Q2 and Q3 due to seasonality, but annualized margin improvement trend remains intact.