- Consolidated Net Sales Growth: 9.6% year-on-year to INR7,780 million.
- Volume Growth Contribution: 5.5% of the net sales growth.
- Gross Margin Expansion: Improvement of 377 basis points year-on-year.
- Advertisement Expenses: Increased by 41.6% year-on-year.
- Other Expenses: Grew by 9.3% year-on-year.
- EBITDA: Grew by 12.2% year-on-year to INR1,622 million.
- Profit After Tax (PAT): INR1,503 million.
- Adjusted PAT Growth: 24.7% year-on-year after eliminating exceptional items and one-time deferred tax assets impact.
- Annual Total Income from Operations: Increased by 3.2% year-on-year to INR23,279 million.
- Annual EBITDA: Down by 8.6% year-on-year to INR3,082 million.
- EBITDA Margin: 13.2% of total income from operations.
- Annual Profit After Tax (PAT): INR2,669 million.
- Adjusted Annual PAT: Down by 9.1% year-on-year after eliminating exceptional items and one-time deferred tax assets.
- Net Debt: INR77 million.
- Consolidated CapEx: INR489 million.
- Everyuth Face Scrub Market Share: 45.6%, an increase of 369 basis points year-on-year.
- Everyuth Peel-Off Market Share: 80.2%, an increase of 174 basis points year-on-year.
- Nycil Prickly Heat Powder Market Share: 35%.
- Glucon-D Market Share: 59.5% in the glucose powder category.
- Complan Market Share: 4.3% in the nutrition drink category.
- Sugar Free Market Share: 95.9% in the sugar substitutes category.
Release Date: May 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zydus Wellness Ltd (BOM:531335, Financial) registered a consolidated net sales growth of 9.6% year-on-year, with 5.5% attributed to volume growth.
- The personal care segment, including Everyuth and Nycil, continues to register strong double-digit growth.
- The company reported a profit after tax of INR1,503 million, with adjusted PAT growing by 24.7% year-on-year.
- The company's research and development capabilities have led to new product launches, such as Glucon-D Activors and Iamlite.
- Zydus Wellness Ltd (BOM:531335) has seen an improvement in gross margins by 377 basis points year-on-year for Q4 FY24.
Negative Points
- EBITDA for the full year was down by 8.6% year-on-year to INR3,082 million.
- The company's net debt stood at INR77 million, indicating some level of financial leverage.
- The food and nutrition segment reported only mid-single-digit value growth for the quarter.
- There was a significant increase in advertisement expenses by 41.6% year-on-year, which may impact profitability.
- The company faces competition from local players, particularly in the personal care space, affecting market share.
Q & A Highlights
Q: Can you provide more insights on the gradual progression in selected consumer spaces and its sustainability?
A: Some categories, particularly personal care, are showing better resilience and response. The food and nutrition portfolio is also seeing a better pull from consumers across channels. We hope this trend will build up as the industry anticipates.
Q: How is the retail offtake during the current summer season?
A: So far, we have seen positive movement from retail, and we are hopeful for a good start to this fiscal year.
Q: There is a considerable jump in A&P spend for the quarter. Is this to support new launches or due to competitive intensity?
A: The increase in advertising spend is to support demand generation and deal with competition challenges. We have optimized our advertising spends as gross margins were under pressure over the last two financial years.
Q: How should we think about EBITDA margin given the current raw material situation?
A: We expect inflation to be manageable, and we aim for a 17-18% EBITDA margin in the next two years. We will continue to improve gross margins and build operating leverage.
Q: Have there been any weather-related disruptions affecting the summer portfolio?
A: Overall, we see a good season. There are always patches with disruptions, but at an overall level, we are seeing a positive uptick compared to last year.
Q: Can you elaborate on the growth in the Complan category and how you plan to improve market share?
A: The category has seen some revival with about 6.5% growth at the MAT level. We are seeing penetration levels grow in double digits. We have initiatives planned for the next few quarters to further build market share.
Q: What is your take on the competition in the sugar-free category, especially from brands like Equal?
A: There hasn't been significant competition. Our focus is on building the category and recruiting new consumers. Sugar Free Green has seen consistent double-digit growth, and we have launched I'mlite to enhance growth.
Q: Can you guide us on the tax rate for the next financial years?
A: For FY25, we won't be paying any tax due to deferred tax liabilities. In FY26, there will be partial tax outflow due to the Sikkim facility benefits.
Q: Should we expect double-digit revenue growth for FY25 considering the recovery in key categories?
A: Yes, we expect double-digit growth for FY25, with personal care continuing to grow in double digits and a fair recovery in the food and nutrition segment.
Q: What are the current distribution touchpoints, and what are the plans for FY25-26?
A: Our products are available in about 3 million outlets. We aim to increase this to 3.5 million outlets over the next two years. We also plan to expand our portfolio within the 6.5 lakh outlets we directly cover.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
