Zydus Wellness Ltd (ZYDUSWELL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Zydus Wellness Limited Q2 FY24 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode.
Moderator: Ladies and gentlemen, good day, and welcome to Zydus Wellness 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 star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashutosh Joytiraditya from ICICI Securities. Thank you, and over to you, sir.
Ashutosh Joytiraditya (ICICI Securities): Thank you. Hello and good afternoon, everyone present on the call. I, on behalf of ICICI Securities, welcome you on Zydus Wellness Limited Q2 FY '27 earnings call. I would like to thank the management for giving this opportunity of hosting the call to us. From the management, we have Mr. Ganesh Nayak, Non-Executive Director; Mr. Tarun Arora, CEO; and Mr. Umesh Parikh, CFO. I will now hand the call over to the management for their opening remarks. Thank you and over to you, sir.
Tarun Arora (Zydus Wellness Ltd): Thank you, and good evening, everyone. Welcome to the post-results teleconference of Zydus Wellness Limited for quarter two financial year 2026-27. I have with me Mr. Ganesh Nayak, Director, and Mr. Umesh Parikh, CFO on the call from our side. During the quarter, amid the high inflation largely driven by commodities, consumption trends continued to reflect sustained positive momentum across categories, supported by a steady recovery in demand and an improvement in rural offline markets. The gradual improvement in consumer demand coupled with consistent performance across categories supported overall growth. E-commerce and quick commerce continue to maintain strong momentum, steadily increasing their contribution to overall sales and further strengthening their role in the evolving consumption landscape. Innovation remains a key growth driver with the focus on emerging consumer needs, new consumption occasions and differentiated offerings. During the quarter key launches included: Sugarfree entered monk fruit monk fruit sweetener category with a non-erythritol formulation. RiteBite Max Protein crunchy cookies, feature featuring 10 gram of protein made without palm oil, maida, or any added sugar. And, of course, continued portfolio expansion in the Comfort Click business through the launch of Vitamin B Complex, Omega-3 Triglycerides, and Vitamin D3 and K2 under the WeightWorld brand. I'll take you through the key highlights of the quarter and half-year ending September to, September 30, 2026. On the financial front, for quarter two financial year 2027, the company reported consolidated net sales of 11,227 million, reflecting a growth of 74.6% year-on-year. On a half-year basis, the company reported net sales of INR 25,526 million, reflecting 70.1% growth year-on-year. With regards to revenue performance snapshot, domestic portfolio delivered robust growth of 29.2% on year-on-year basis during the quarter, of which seasonal brands grew by 123.5% on a low base, Skin and Hair Care brands continued its growth momentum with 37.5% growth, and Food and Nutrition delivered a strong growth of 25.1%. On a half-year basis, domestic portfolio registered growth of 13.3%, in which Skin and Hair Care grew by 35.8%, Food and Nutrition grew by 20.7%, while Seasonal brands degrew by 8.7%. International business registered like-to-like growth of 12.4% during this quarter and 18.6% in the first half of financial year 2027. Gross margin expansion continued in the core business and was further accelerated by higher margin of the Comfort Click business. On the EBITDA front,
Tarun Arora (Zydus Wellness Ltd): the company delivered growth of 271.7% during the quarter reaching ₹855 million. The results underscore robust EBITDA margin improvement across businesses, resulting in EBITDA expansion on a like-to-like basis. On half year basis, company registered an EBITDA growth of 83.2% reaching to ₹3,272 million. Detailed brand performance and market share developments are covered in the investor presentation. Key highlights for the quarter are as follows. Everyuth continued to deliver double-digit growth led by the tan removal and peel-off franchises. The brand continued to strengthen its position in facial cleansing with significant market share improvement supported by innovation and consumer acquisition initiatives. Nutralite delivered strong double-digit growth across the portfolio despite commodity headwinds. Sugar Free brand replicated its double-digit growth performance from the previous quarters in the current quarter. RiteBite Max Protein sustained its strong growth trajectory reinforcing its leadership protein snacking through innovation-led category expansion and strong value and volume growth. Cuticura has been increasingly witnessing strong uptick achieving positive consumer feedback across organized channels. During the quarter, the brand expanded its portfolio with the launch of bright brown, further strengthening its differentiated proposition in the safer hair colour segment. Complan registered double-digit growth, outperforming the category trend. Complan NutriGro kids maintained strong growth momentum supported by direct supply through newly set-up, own medical marketing team. We remain focused on driving innovation, digital transformation, and disciplined growth. A diversified portfolio and expanding market presence positions us to deliver sustainable growth and further margin expansion. Thank you. We will now begin the Q&A session. Over to the coordinator.
Moderator: Thank you, sir. We will now begin with a question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset 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 Siddhesh Deshmukh with IIFL Capital. Please go ahead.
Siddhesh Deshmukh (IIFL Capital): Hi, sir. Thanks for taking my question and congrats on a good set of numbers. My first question is with respect to Comfort Click. And you see the growth has moderated from 25% last quarter to 12% this quarter. So could you explain what drove the slowdown and what corrective actions are we taking for the growth to come back? And also since the 2Q growth is below the aspirations which we had set at the time of acquisition, how do you see FY '27 shaping up for Comfort Click?
Tarun Arora (Zydus Wellness Ltd): So, at an overall level, I think there are, you know, normal business cycles that go through. There is a small shift in the, you know, some of the Prime Day between June and July, which swing the number a little bit. Also we're see, you know, seeing some challenges in one or two markets as we shifted between the old, you know, website to the new website where we lost some momentum, but we're quite hopeful that the double-digit growth that we've talked about will continue to move forward. This quarter has been slightly lower than our expectation, but the, some of the markets have also given us hope that we could build further on this. So we'll have to wait and watch. But at a, if you really look at it on a moving average level, I think we've seen consistency of the numbers. First half is at the international business is about more than 18% and therefore we will take it as, as things come. But we remain consistent in our view of a double-digit growth on this business as we stand today.
Siddhesh Deshmukh (IIFL Capital): Got it. So my second question is with respect to Complan. We've delivered a double-digit growth this quarter and we've outpaced the category growth.
Siddhesh Deshmukh (IIFL Capital): So, can you dig a little deep in what initiatives you have taken in this brand and how do you see the growth going ahead?
Tarun Arora (Zydus Wellness Ltd): So, I think we are also generally pleased with our Complan numbers, the way they have played out. But I don't think it's a one quarter performance. We have been able to do our positive momentum on Complan for now three quarters and we are hopeful that we will be able to maintain because the category is being under pressure generally. But last three quarters have given us hope that most of our initiatives will work. To name few, I think the fact that we have got a very good celebrity who fits in very well, Vaibhav Suryavanshi, and some of the, you know, campaigns that we worked with him have had a very good response from the consumers. Last quarter we also launched 50% lower sugar. I mean we have relaunched with 50% less sugar. Also relaunched Complan NutriGro, which is 2 to 6 year toddler initiative. Some of these things plus some of the on-ground work and distribution and other pieces, all have come together and have given us now three quarters of continuous momentum. So fingers crossed, we'll continue to keep executing the way we have and hope that the momentum will continue to build on this.
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