Zota Health Care Ltd (ZOTA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Zota Health Care Limited Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is now being recorded. I now hand the conference over to Mr. Ajit Mishra from Zota Health Care Limited. Thank you and over to you, sir.
Ajit Mishra (Zota Health Care Limited): Thank you. Before we proceed to the call, let me remind you that their discussion may contain forward-looking statements that may involve known or unknown risk, uncertainties, and other factors. It must be viewed in conjunction with our business risk that could cause future results performance or achievement to differ significantly from what it expressed or implied by such forward-looking statements. Please note that we have mailed the press release, presentation, results, and the same are available on the exchange and company website. In case if you have not received the same, you can write to us and we will be happy to send the same over to you. To take us through the Q2 FY '27 results, business performance, and address your questions today, we have the management of Zota Health Care Limited represented by Mr. Himanshu Zota, Founder and Whole-Time Director; Mr. Moxesh Zota, Managing Director; and Dr. Sujit Paul, Group Chief Executive Officer. We will start the call with an opening remark on brief overview of the performance for the quarter gone past, followed by question and answer session. With that said, I will now hand over the call to Moxesh Zota. Over to you, sir.
Moxesh Zota (Zota Health Care Limited): Thanks, Ajit. Hello, everyone, and thank you for the joining us today. We appreciate your time and continued interest in Zota Health Care Limited. I hope you have
Moxesh Zota (Zota Health Care Limited): call. We consciously moderated the pace of DavaIndia store expansion during the quarter. Over the past few quarters, we have expanded our network at a rapid pace. Therefore, during Q2, our focus was on consolidating the expanded store base, closely monitoring the performance of recently opened stores, improving store level productivity and strengthening strengthening execution across the network. Despite the planned moderation in new store addition, the underlying business momentum remained healthy. DavaIndia sales grew by more than 76% year-on-year, while the overall network reached 2,840 stores as of September 30, 2026. During the quarter, we had 20 new stores, comprising four COCO stores and 16 FOFO stores. We also closed five FOFO stores as a part of our regular network optimization process. Customer engagement customer engagement continued to improve during the quarter. We served approximately 60 lakh customer during the quarter, while DavaIndia's quarterly GMV increased to around 188 crores. This reflects the growing acceptance of our affordable generic medicine and the improving performance of our store store network. We are also seeing encouraging improvement across different store vintages. As stores mature, their average monthly GMV is increasing, which gives us confidence in the long-term potential of the network. Our core purpose remains unchanged, to improve access to quality and affordable medicine across India. DavaIndia continues to offer customers meaningful savings compared with the branded medicine, supported by a private level portfolio and integrated operating model. During the quarter, we also converted approximately 119.52 crores of outstanding unsecured loans and accumulated interest received from DavaIndia Health Mart Limited into equity. This transaction strengthens our investment in subsidiary and supports the long-term development of DavaIndia platform. There was no fresh cash outflow involved in this transaction. Looking ahead, our focus on remaining sustain remaining on sustainable and disciplined growth. After moderating expansion during Q2, we intend to accelerate store addition during second half of FY '27, and move towards our full-year expansion plan. At the same time, we'll continue to focus on improving store productivity, operating efficiency and cash generation. Our objective is not only to expand the network, but also to ensure that growth is healthy, scalable and sustainable. We remain confident about the opportunity in India's affordable healthcare market, and the long-term potential of DavaIndia platform. With that, I will now hand over the call to Mr. Himanshu, who will take you through other financial and operation performance in greater detail. Thank you.
Himanshu Zota (Zota Health Care Limited): Thank you, Mokshesh. Good afternoon, everyone. Let me know to take you through the key financial and operational highlights of Q2 FY '27. During the quarter, our consol revenue from operations stood to 199.33 crore, registering a growth of 54.6% compared with 129 crore in Q2 FY '26. On sequential basis, revenue grew to approximately 14.8%. The growth was mainly driven by DavaIndia, where sales increased by 76% Y-o-Y basis to 168 crore, which contributed around 82% of total consol revenue, and rest 18% contributed by other remaining businesses. Gross profit for the quarter stood to roughly 120 crore with a gross margin of 60.17%, which was higher than the gross margin of 59.33% reported in corresponding quarter last year. One of the key highlight of the quarter was sequentially recovery in profitability. Consol EBITDA turned positive 7.9 crore compared with a negative EBITDA of minus 9.55 crore in Q1 FY '27. The EBITDA margin for Q2 FY '27 stood to positive 3.97%. This improvement reflect the benefit of moderating the store addition, increase in the revenue from existing network and maintained a strong focus on operating efficiency. After accounting the depreciation, finance cost and tax, the company reported consol loss after the tax is 25.96 crore for the quarter compared with a loss of 43.94 crore in Q1 FY '27. Coming to the operation performance of DavaIndia, network stood to 2,840 stores as on September 30. This include 1,859 COCO store and 981 FOFO stores. Quarterly customer footfall increased to 66.17 lakh compared with 43.53 lakh in Q2 FY '26. DavaIndia quarterly GMV increased to 188 crore roughly
Himanshu Zota (Zota Health Care Limited): 106 crore in the corresponding quarter last year. Within a COCO network, quarterly GMV increased to 137.87 crore from 115.69 crore quarter-on-quarter basis which reflects the very strong SSG growth while average wallet spend improved to 283 compared with 229 in Q2 FY 26. The performance of our mature store also con- continue to improve. Store opened between FY 21 to 24 reported an average monthly GMV per store per month is 4.6 lakh during the Q2 FY 27, compared with 4.13 lakh on quarter-on in Q1 FY 27. Similarly, store opened during FY 24-25 reported average monthly GMV per store per month is 2.5 lakh, compared with 2.28 lakh in previous quarter. This trend shows that the store productivity improved as mature and customer awareness increased in the respective market. For H1 FY 27, consol revenue from operations stood to 372 crore 372.93 crore while gross profit stood to 227.5 crore. The gross margin for the first half was 61%. As we move into the second half of the year, our priority remains the clear. We will focus on increasing store level sales, improving store operation efficiency, strengthening the inventory management, and maintaining the discipline network expen- expansion. We believe the scale of our Davaindia network, improving store maturity maturity and growing customer acceptance provide a strong foun- foundation of sustainable long term growth. With that, we would now like to open the floor for question and answer. Thank you.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Swaraj Mehta from Perpetual Capital Advisors. Please go ahead.
Swaraj Mehta (Perpetual Capital Advisors): the opportunity and congratulations on a great set of numbers. So, my first question was we had a big marketing cost in quarter one FY 27 for signing up brand ambassadors. I just wanted to understand how are the marketing efforts being deployed? So, where are our our targetted ads being played and how do we choose which mode of communication to target?
Sujit Paul (Zota Health Care Limited): Okay. Yes, you are right that you know we have signed the relevant brand ambassador. The the way how we are taking it forward is that see, we basically push for affordable medicines. So, the medium of transmission for this brand ambassador is primarily for this quarter that we have done is through all the BTL exercises more from a neighborhood perspective, along with the social medias that you find like like your Insta, YouTube, and Facebook, as we felt that along with a a strong push in the BTL segment at a store level, at the neighborhood level and the social media would not only give a deeper penetration for the for the for the brand persona that you're talking about, but it would also give a huge cost optimization towards the organization that could actually help on a overall numbers for the organization.
Swaraj Mehta (Perpetual Capital Advisors): And how So, will the mode of communication change, but and how do we choose which mode of communication to target when?
Sujit Paul (Zota Health Care Limited): Right. So, if you see the last quarter our mode of communication was different, and for this quarter that the mode of communication is different. So, it all differs on how we want to take the brand ambassador, whether it is ATL or BTL. So, when when there is a need, then we push for ATL, meaning with the television, etcetera. And when there is a need, we push for BTL and the social media. The the way how we select is on the target pinpoint marketing that we do, which we are doing. And not only that, along with that, we also ensure that the mass consumer knows about the brand ambassador and and all the commercials that we have through multiple social media handles
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