Zydus Wellness Q1 Review- Turnaround In Progress; Favorable Seasonality Lifts The Q1 Further: ICICI Securities

ICICI Securities Report

Zydus Wellness Ltd.'s Q1 FY25 revenue and volume growth trajectory (+20% YoY and 17% YoY – above our estimates; highest-ever Q1) witnessed material acceleration. This was driven by:

1. favorable seasonality summer portfolio (Glucon D and Nycil);

2. improving demand trend across other categories with rural outperforming urban; and

3. interventions in sweetener portfolio to address external headwinds – i) Upgraded Sugar Free to Sugar Free Gold with new superior formulation (Sucralose plus Chromium; excluded Aspartame) while reducing taste penalty. ii) Re-entered blended sugar with launch of Im’lite (scaled up to ~60–70% of SugarLite’s scale within a few months of launch.

Gross margin has largely recovered to pre-inflation period at 55.6% (+304bps YoY) while Ebitda margin expanded by 187 bps to 18.5%. We like management’s plans to drive distribution expansion (~0.7 million, from ~0.6 million currently), digitisation and innovation to sustain growth. Maintain Add.

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