Zydus Wellness stock jumps 5%; hits 2-year high on hopes of demand recovery

Shares of Zydus Wellness hit an over two-year high of Rs 2,287, surging 5 per cent on the BSE in Monday’s intra-day trade in an otherwise subdued market on hopes of demand recovery. The stock of packaged foods company was trading at its highest level since October 2021. It had hit a record high of Rs 2,472.85 on September 21, 2021. In comparison, the BSE Sensex was down 0.05 per cent at 80,562 at 12:11 pm.

Since April, thus far in the financial year 2024-25, the stock price of Zydus Wellness has appreciated by 55 per cent. In the past one month, the stock has rallied 23 per cent, as compared to 4 per cent rise in the benchmark index.

 

Zydus Wellness is engaged in health and wellness segments. Five of its six brands are market leading brands viz. Sugar Free, Nutralite, Glucon-D, Nycil and Everyuth Scrubs and Peel Offs. It is engaged in research and development, manufacturing, marketing and distribution and sale of its products.

During the financial year 2023-24 (FY24), the company reported total revenue from operations at Rs 2,327.8 crore (+3.2 per cent year-on-year (YoY)). Profit after tax declined 14 per cent YoY at Rs 266.9 crore. Gross margins, however, improved 193 bps YoY at 50.8 per cent.

During the year, the fast moving consumer goods (FMCG) sector witnessed demand pressure for both urban and rural. Rural demand growth lagged behind urban demand growth during major part of the financial year, mainly due to erratic monsoon across various parts of the country and low growth in agriculture sector. The rural consumption growth gradually picked up and surpassed urban in quarter four of financial year 2023-24 (Q4FY24).

For the company, the personal care segment which is represented by Everyuth and Nycil brand witnessed a very strong double-digit growth for the financial year, while the food and nutrition segment reported a flattish growth.

The management sees encouraging signs of industry recovery, with inflation stabilising and margins poised for improvement. Green shoots of demand pick-up have been observed, further fuelling our confidence, the management said.

“The Indian FMCG industry, a cornerstone of the nation’s economy, is poised for good growth in the calendar year 2024, albeit at a moderate pace compared to the previous year. The rural consumption growth converging with that of urban along with the industry’s remarkable ability to navigate complexities and adapt to evolving market dynamics are likely to play the key factors underpinning the growth outlook for 2024,” Zydus Wellness said in its FY24 annual report.