Market Price Rs 814(FV 10 ) Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 3180 crs Date: 2nd October 2015
Target : Rs 1100 Time frame : 1 year
Rating : Multibagger in long run
About the Company:
Zydus Wellness was also recommended at Rs 450 levels in the hot shot column of Chanakya in May 2013. This company was known as Carnation Nutra Analogue Foods and was mainly into the manufacturing of Nutralite butter. It was taken over by Zydus group led by Mr Pankaj Patel and Mr Sharvil Patel. Since then the company has seen huge growth in fortunes and is doing well on all fronts. The company has merged 2 of its divisions also changed the name to Zydus Wellness Ltd. The industry of Indian FMCG stands at a huge $37 billion.
The company already had the Nutralite butter brand in its portfolio and now Zydus has merged Sugar Free and Everyuth brands with it. Sugar free is one of the biggest brands in terms of brand value, which is a substitute for sugar and used by diabetic patients. In Sugar free apart from the product, the company has launched host of diet drinks which have good taste. Sugar Free Natura is the natural brand of Sugar free for the more health conscious. On the other hand, Everyuth is a cosmetic brand which has good presence in Facial tubes, Scrubs etc. The walnut apricot scrup is very well received in the market. The new entrant in the beauty space is the launch of the entire range of Mens products which have been well received. The new product call Actilife which was launched in different flavours was well received. This product was aimed to provide nutrition to the mid aged people and also reduce cholesterol. Apart from this the entire range of D’lite sugar free drinks were also launched for people who believe in better fitness.
Sugar Free “Stevia” has been test marketed in various markets. New product launches such as Everyuth Tulsi Termeric Face wash, Walnut apricot scrub, Advance Refereshing face wash have been introduced. Also Nutralite has now the good properties of Omega 3. Nutralite is the number one brand with market share of 37.6%
For the year ending March 2010 the company saw sales of 274 crs and saw net profit of 45 crs. EPS for the year is 12. For the year ending March 2011, the company saw sales of Rs 343 crs and net profit was in the region of 59 crs. The year March 2012, the company saw sales of Rs 400 crs plus with net profit of Rs 67 crs and EPS was at Rs 17 plus. The Sikkim plant has started full production. The year March 2013, 2014 and 2015 saw sales of Rs 213, 203 and 219 crores respectively and Net profits in the region of Rs 97 cr, 96 cr and 108.5 crs. The consolidated sales for March 2015 stands at Rs 443 crores. The EPS is near 28 per share and being a debt free company, there are huge possibilities that the company may introduce lots of new products in the future.
Dividend of Rs 6 per share was declared this year.
The promoters holding is about 72.5% and Fii hold about 8% while Dii hold 5.31% and public holding is 14%
Comparisions to Peers:
There is no listed peers in this sector. Wellness is a part of my pharma companies but it has no listed direct comparision indicators not compared on strict PE comparisions. It will be more compared to FMCG and the PE ratio enjoyed by this sector will be 25-35 as growth will be high as the entire industry is at a very nascent stage and huge growth would happen in coming years.
These days a lot of emphasis is put on wellness. People want to live a better quality of life and that is all what Zydus Wellness is all about. Its about preventing the damage before its done. This company will always enjoy fancy valuations and will continue to do well on the stock exchange. It has a lot of potential in terms of sales rise and is a very safe stock with strong management and strong brands. The new facility in Sikkim will enjoy 10 year tax holiday.
This year the sales and profit will show good growth and will trigger rerating.
The current rate of 814 per shares is tipped to touch 1100 mark in the next 1 year but if a person looks into the long term then this is a multibagger in the making.
( Disclosure: The analyst has no holdings in the company as on date of issue being published) Analyst ( Janak Shah ) is a sebi certified research analyst Registration No: INH000001717
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