Zydus Wellness’ Profit Down by 13.4% in June Quarter

Ahmedabad, July 30, 2025: Zydus Wellness Ltd (NSE: ZYDUSWELL | BSE: 531335) reported a marginal rise in revenue for Q1FY26, while profit after tax (PAT) declined amid cost pressures and weather-induced demand fluctuations. Its profit in the quarter declined y-o-y by 13.4% to Rs 127.9 crore. Net revenue increased y-o-y by 2.2% to Rs 857.7 crore.

Key Consolidated Financial Highlights (₹ in Million)

In Q1 FY26, Zydus Wellness reported Net Sales of ₹8,577 million, marking a 2.2% year-on-year (YoY) increase from ₹8,391 million in Q1 FY25. Revenue from Operations also saw a slight rise of 2.4% YoY, reaching ₹8,609 million compared to ₹8,410 million in the previous year. Gross Contribution stood at ₹4,731 million, showing a modest 1.2% YoY growth from ₹4,677 million. However, the Gross Margin as a percentage of Net Sales decreased by 73 basis points (bps) to 54.8% from 55.5%. EBITDA recorded a marginal growth of 0.2% YoY, reaching ₹1,556 million from ₹1,553 million, although the EBITDA Margin was 18.1%. Profit Before Tax (PBT) declined by 4.2% YoY to ₹1,453 million from ₹1,516 million, and Profit After Tax (PAT) experienced a more significant decline of 13.4% YoY, falling to ₹1,279 million from ₹1,477 million.

Segment-Wise Performance

Despite the modest overall growth, the company’s segments showed varied year-on-year performance. The Food & Nutrition segment grew by 1.6%, while the Personal Care segment demonstrated slightly better traction with a 3.8% growth. The company noted that seasonal brands were impacted by unseasonal rains and shorter summers.

Margin Dynamics

Gross margin dropped 73 bps YoY to 54.8%, which was largely attributed to a lower mix of seasonal products. However, key input costs, such as milk and edible oils, showed favourable trends, contributing to margin stability. Specifically, milk prices declined by 4.7% YoY, and edible oils fell by 4.8% sequentially.

Brand & Market Highlights

Sugar Free maintained its dominant position, holding a #1 market share of 96.1% and gaining 108.7 bps YoY. Its “Green” variant continued its impressive streak of 17 consecutive quarters of double-digit growth. In the personal care category, Everyuth Scrubs and Peel-Off Masks held leading market positions with 48.7% and 77.2% share, respectively.

RiteBite Max Protein expanded into global markets and led growth in the nutrition bar category. The company’s international business now derives approximately 85% of its international revenues from its top 5 markets and aims to contribute 8–10% of total revenues within the next 4–5 years.

Management Commentary

While no direct quote from executives is available in the investor deck, the company highlighted that most core brands recorded gross margin expansion, and input cost moderation is expected to support profitability in coming quarters.

Insights For Investors

• Modest Revenue Growth: Net Sales grew by 2.2% YoY, indicating stable but subdued topline performance amid demand fluctuations.
• Profitability Under Pressure: PAT declined by 13.4% YoY due to muted sales growth and reduced gross margins, signalling near-term margin stress.
• Margin Concerns: Gross margin dropped by 73 bps to 54.8%, mainly due to a lower seasonal product mix; however, falling input costs like milk and edible oils may support margins ahead.
• Segmental Performance: Food & Nutrition and Personal Care segments grew 1.6% and 3.8% YoY, respectively, reflecting a mild consumer demand revival.
• Brand Leadership Maintained: Sugar Free and Everyuth continued to hold dominant market shares, highlighting brand strength and category leadership.
• Global Growth Potential: RiteBite Max Protein’s international expansion and contribution goal of 8–10% to total revenue in 4–5 years shows long-term growth potential.
• Stock Movement Post-Results: Share price dipped 0.80% post-earnings, reflecting market caution on profitability trends.
• Cautious Optimism Ahead: While input cost tailwinds may aid margins, volume recovery and seasonal demand trends will be key for future performance.

Future Outlook

Zydus Wellness enters the upcoming quarters with a cautiously optimistic outlook. While Q1FY26 reflected modest revenue growth and a notable decline in profitability, input cost moderation—particularly in milk and edible oils—offers a silver lining for margin recovery. The company’s focus on its core brands like Sugar Free and Everyuth, which continue to hold leading market shares, positions it well to defend its leadership in key categories.

Moreover, the strategic expansion of RiteBite Max Protein in international markets signals a long-term growth trajectory, especially with management targeting 8-10% of total revenues from overseas in the next few years. However, the impact of unpredictable weather patterns on seasonal products and sluggish demand remains a concern. Continued focus on cost efficiency, margin management, and sustained brand traction will be critical for driving earnings stability and shareholder value going forward.

About Zydus Wellness Limited

Zydus Wellness Ltd, a listed entity on NSE and BSE, is a leading consumer wellness company in India with a diversified product portfolio across food, nutrition, and personal care. Its key brands include Sugar Free, Complan, Glucon-D, Everyuth, Nycil, Nutralite, and RiteBite Max Protein.

Headquartered in Ahmedabad, the company continues to scale its operations both in India and abroad through innovation-led growth, a strong distribution network, and brand leadership across segments.

REF:https://nsearchives.nseindia.com/corporate/ZYDUSWELL_30072025130441_SEintimationInvestorPresentation.pdf

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