Zydus Wellness Ltd Ltd Quarterly Results Q4 FY 25 stock analysis

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Sector Outlook: Positive

Achieves strong revenue growth and expands market presence

In Q4FY25, Zydus Wellness Ltd. reported revenue growth of 97.7% QoQ and 16.7% YoY to Rs. 9,131 million, supported by volume growth of 13%, especially from the smaller unit packs. The consumption trend continues to be stable and indicates that the rural market continues to outperform urban markets, although urban markets are closing the gap. The growth was seen across sectors; the food and beverages segment grew 15.4% YoY, and the personal care segment saw a 22.5% YoY growth. Nycil maintained its leadership in the market with a 33.8% share, while the Everyuth brand demonstrated strong performance in its peel-off masks and scrubs, capturing a 48.5% market share in the facial scrub segment and 77.7% market share in the peel-off category. Glucon-D commands a market share of 58.8%. Sugar-Free continued to dominate the sugar substitute sector with a commanding 95.9% market share. Although volatile edible oil prices remain a concern, easing food inflation has driven the overall inflation down and resulted in gross margin to grow by 592 bps QoQ and 27 bps YoY in Q4FY25 at 54.9%. The company’s EBITDA surged by 17.1% YoY to Rs. 1,900 million, resulting in an EBITDA margin of 20.8%, driven by an effective hedging strategy, a favourable product mix, and a calibrated price increase. The company registered a net profit of Rs. 1,719 million, growth of 14.4% YoY, with a margin of 18.8%. During the quarter, the company entered the Sheet Mask category with the launch of 3 exciting variants: Golden Glow, Anti-Pollution and Aloe Cucumber. The board of the company recommended a dividend of Rs. 6 per equity share of Rs. 10 each. The board also recommended a stock split in the ratio of 1:5, which means that one equity share of the company, which currently carries a face value of Rs. 10, will now turn into five equity shares with a face value of Rs. 2 each, subject to approval of the members at the ensuing Annual General Meeting.

Key Concall Highlights

The overall FMCG demand remained steady, with strong consumer traction across multiple categories. Rural consumption continued to surpass urban demand, primarily driven by smaller unit packs, and the premiumization trend persisted across regions, reflecting a growing preference for value-added products.
Digital commerce continues to expand—Q-com drives instant, small basket demand in metros, while marketplaces deepen reach in smaller towns with rising adoption and premium preferences.
Despite concerns over volatile edible oil prices, the decline in food inflation has helped reduce overall inflation, while gross margin has remained stable with a slight upward trend year-on-year and sequentially, supported by effective hedging strategies, a favorable product mix, well-calibrated price adjustments, strategic supply chain enhancements, and digital marketing investments that drive operational efficiencies and foster growth across key channels.
Zydus’ strategy focuses on growing brands through digital marketing, e-commerce activations, and consumer engagement.
The company’s acquisition of Natural India Private Limited (NIPL) is progressing smoothly, with strong product growth and well-aligned strategic initiatives.
The company is looking at acquisitions that can help expand its base outside India, specifically in regions such as Sub-Saharan Africa, Nigeria, GCC, South Asia, or Southeast Asia.
Management is confident in its strategy to drive sustainable long-term growth through innovation and adapting to changing consumer preferences. With a long-term margin target of 17-18%, the company focuses on improving gross margins and enhancing operational efficiency to sustain double-digit top-line growth.

Valuation and Outlook

Zydus Wellness operates in the consumer wellness sector, with two segments: Food & Nutrition and Personal Care, focusing on a portfolio that prioritises health and wellness. The Indian wellness sector is growing due to increased awareness amongst the population. The company owns flagship brands such as Nycil, Everyuth, Glucon-D, and Sugar-Free, which command a dominant market share and are well-positioned to capture the growing industry’s need. The company’s recent acquisition of Naturell (India), which sells nutrition bars and snacks under the Ritebite Max Protein brand, has performed well and is expected to further strengthen its market position. During Q4FY25, the company continued to register double-digit revenue growth with stable gross margins. Going ahead, the company focuses on continuing this double-digit revenue growth in FY26, supported by expanding its product portfolio, leveraging its pan-India marketing presence and a positive boost in the consumption trend. Further, the management anticipates seeing revenue growth by expanding its footprint in the international market, with a target of contributing 8 to 10% to the overall revenue. The company is also strategically emphasizing improving the margins of the company with the expectation of achieving EBITDA margins of 17-18% in the coming years from 14% in FY25, driven by pricing power, cost-saving measures and operational leverages. Given these factors and management’s prioritised focus on profitability and operational efficiency, we remain optimistic about Zydus Wellness’s future growth potential.