Buy Zydus Wellness, target price Rs 2250: ICICI Securities

ICICI Securities has buy call on Zydus Wellness with a target price of Rs 2250. The current market price of Zydus Wellness is Rs 1707.15. Time period given by analyst is one year when Zydus Wellness Ltd. price can reach defined target.

Zydus Wellness Ltd., incorporated in the year 1994, is a Mid Cap company (having a market cap of Rs 10852.14 Crore) operating in FMCG sector.

Zydus Wellness Ltd. key Products/Revenue Segments include Personal Care and Other Operating Revenue for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 390.78 Crore, up .97 % from last quarter Total Income of Rs 387.01 Crore and up 1.74 % from last year same quarter Total Income of Rs 384.10 Crore. Company reported net profit after tax of Rs 23.30 Crore in latest quarter.

Investment Rationale
The brokerage cut earnings estimates by ~10% for FY23. It models revenue / EBITDA / PAT CAGR of 11% / 15% / 27% over FY21-24E – net profit likely to grow ahead of revenue and EBITDA driven by deleveraging of balance sheet. It maintains BUY with a DCF-based revised target price of Rs 2,250 (Rs2,500 earlier). At the target price, the stock will trade at 31x P/E multiple Sept-23E. Key downside risks are delays or failures in new product development or inability to expand distribution.

Promoter/FII Holdings
Promoters held 64.82 per cent stake in the company as of 31-Dec-2021, while FIIs owned 3.39 per cent, DIIs 24.8 per cent.