Zydus Wellness
hosted a conference call on November 11, 2024, which was attended by Dr.
Sharvil Patel, Chairman; Mr. Tarun Arora, CEO; and Mr. Ganesh Nayak, Director.
Key takeaways of the call
In
Q2 FY25, the Company’s iconic brands continued to perform well. Volume growth
was 8% YoY.
Management
indicated that urban demand had been under pressure, while rural demand
continued its gradual recovery.
Organized
trade continues to shine with upward momentum for both E-Com and Modern trade.
The
company reported sharp spike in few commodity prices. High import duty and
inflationary pressure led to sharp increase in edible oils prices.
Margin
is expected to improve driven by effective hedging strategy, favorable product
mix and calibrated price increases.
In
Q2 FY25, Food & Nutrition segment grew 9.7% YoY and Personal Care 26% YoY.
In H1 FY25, Food & Nutrition segment grew 12.9% YoY and Personal Care 36.6%
YoY.
Sugar
Free franchise and Complan constitutes 90% of its international business.
Nigeria business remained subdued due to macro-economic issues. However, Middle
East business continues to do well.
The
company is targeting 8-10% of its total revenue from international business in
next 4-5 years.
On
30 Oct 2024, the company entered into a definitive agreement to acquire 100%
stake in Naturell (India), a leading healthy snacking company with the turnover
of approx. Rs 119 crore in FY2023-24 as per Ind AS. Naturell Company is engaged
in the business of manufacturing, research and development, marketing and
selling of Nutrition bars, Protein cookies, Protein Chips and health food
products under brands Ritebite Max Protein (Protein fueled healthy snacks) and
Ritebite (fiber-enriched snacks).
The
acquisition seamlessly aligns with Zydus Wellness’ strategic vision of expanding
its footprint in the consumer wellness industry by foraying into the rapidly
growing healthy snacking segment. It further strengthens company’s market
presence and commitment to addressing the evolving needs and preferences of
health-conscious consumers. The transaction is proposed to be funded by cash
and is expected to be EPS accretive for Zydus Wellness from the next year
post-acquisition. The total consideration of Rs 390 crore comprises of upfront
consideration of Rs 369 crore and earnout Rs 21 crore which shall be determined
upon achievement of agreed milestone for FY2025.
In
the food and nutrition segment, Glucon-D continued to maintain its number one
position with 59.4% market share as per MAT September 2024. The Glucose powder
category has grown by 20.8% at a MAT level. The Sugar Free brand maintains its
dominant position with a commanding market share of 93.9% in the sugar
substitute category, which has grown by 5.4% at MAT level. Sugar Free Green
continues to experience strong double-digit growth driven by increasing volume
uptake.
In
Q1 FY 25, the company upgraded Sugar Free Gold to Sugar Free Gold+ with a new
formulation Sucralose + Chromium. Chromium contributes to the maintenance of
normal blood glucose levels. I’m Lite brand continued gaining a positive
response in the market.
The
nutrition drink category has continued showing signs of revival across key
metrics. Complan has added nine lakhs household over last year as per MAT
August-24 reports of Kantar Panel. While the category has grown by 2.8% at MAT
level, Complan’s market share stood at 4.1% at MAT level.
In
the personal care segment, the Company’s brands Nycil and Everyuth continued to
register a strong performance. The prickly heat powder category has grown by
21.6% at MAT level. Nycil has maintained its number one position with a market
share of 34.3%. Nycil witnessed robust growth, favorable summer season and
consistent media visibility.
Everyuth
continues to outpace category growth and has registered a strong growth. The
face scrub category has grown by 17.3% at MAT level. Everyuth Scrub has
maintained its leadership position with market share of 46% in the facial scrub
category, which is an increase of 355 basis points over the same period last
year.
The Peel off
category has grown by 26.4% at MAT level. Everyuth Peel off maintains its
number one position with a market share of 77.9% in the Peel off, which is an
increase of 189 basis points over the same period last year.
Stepping up its
research and development capabilities, the Company continues to launch new
products and extensions. The Company forayed into the adult nutrition space
delivering high quality protein with pre and probiotics to support Gut-Muscle
Axis under the brand name Complan Viemax. Bringing in a plant-based table
spread under the umbrella of Nutralite, the Company has introduced a 100%
plant-based buttery spread in two delicious variants: Olive and Garlic &
Herbs.
Zydus Wellness
has also ventured into the cheese category with Nutralite Professional and
launched few variants of mayonnaise and fat spreads. Following a strong
positive response from international markets, the Company has launched Sugar
Free D’lite Cookies in India.
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