Analyst Meet / AGM     11-Nov-24
Conference Call
Zydus Wellness
Acquisition of Naturell (India) will strengthen its position in the growing healthy snacking segment

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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