Buy Zydus Wellness; target of Rs 2250: Sharekhan

Sharekhan is bullish on Zydus Wellness has recommended buy rating on the stock with a target price of Rs 2250 in its research report dated July 29, 2022.

Broker Research

July 31, 2022 / 02:41 PM IST

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

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Sharekhan's research report on Zydus Wellness

Zydus Wellness Limited’s (Zydus) reported higher-than-expected Q1FY2023 performance. Revenue/adjusted PAT grew by 16.6%/6.8% y-o-y. Volume growth stood at 10.3%. Margins down y-o-y due to sustained input cost inflation. Zydus gained/maintained market share/leadership position in most product categories. Focus is on sustained market share gains in key brands. Summer brands, Glucon D and Nycil, delivered strong double-digit growth after two years of lull. Management is targeting double-digit revenue growth over the next two years, aided by distribution expansion and product innovation.

Outlook

We maintain Buy with an unchanged PT of Rs. 2,250. The stock trades at 27.7x/20.0x its FY2023E/FY2024E earnings, which is at a discount to some large peers.

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