ICICI Securities recommends reduce on Zydus Wellness, target price Rs 1,300

ICICI Securities has recommended a reduce rating on the Zydus Wellness stock in the long term with a target price of Rs 1,300. Shares of Zydus Wellness gained 2.9% to Rs 1470 on Monday while the BSE Sensex closed 42.28 points up at 40,487.43.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 326.03 crore, down -47.44% from last quarter sales of Rs 620.25 crore and up 135.89% from last year same quarter Sales of Rs 138.21 crore. The company has reported net profit after tax of Rs -12.02 crore in the latest quarter.


The company’s top management includes Dr.Sharvil P Patel, Mr.Ashish Bhargava, Mr.Ganesh Nayak, Mr.Kulin Lalbhai, Mr.Savyasachi S Sengupta, Mr.Srivishnu Raju Nandyala, Mr.Tarun G Arora, Ms.Dharmishta N Raval. Company has Dhirubhai Shah & Co. LLP as its auditors. As on 30-09-2019, the company has a total of 57,664,144 shares outstanding.

Investment Rationale

Synergies from acquired portfolio, wider distribution network and negligible tax rates in the near term would allow Zydus to report 26% earnings CAGR over FY19-22E. However, due to an increase in debt and equity, the return ratios of the company are at low single digit and would take a good five to seven years to reach double digit levels, said the brokerage.