Zydus Wellness - Q1 FY27 Earnings Call Summary Tuesday, August 4, 2026 3:00 PM IST
Event Participants
Executives
3 Ganesh Nayak (Non-Executive Director), Tarun Arora (CEO), Umesh Parikh (CFO)
Analysts
7 Aniket Kamble (ICICI Securities), Hardik Jatheliya (Ardeko Asset Management), Mayur Parkeria (Wealth Managers India), Parth Sodha (Trinetra Asset Managers), Ronak Shah (Equirus Securities), Simran Kumari (Narnolia Financial Services), Umang Shah (Banyan Tree Advisors)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Net Sales | ₹1,430 crores (INR 14,299 million) | +66.7% YoY, largely driven by Comfort Click consolidation; core business saw resilient demand with premiumization trend |
| Domestic Business Growth | +4.6% YoY | Skin & hair care (+34.5%) and food & nutrition (+16%) offset seasonal brand decline of 12% |
| International Business (incl. Comfort Click) | +24.8% LTL YoY | Europa (UK, France, Italy, Germany, Spain) drives bulk; US D2C launch and Middle East expansion in early innings |
| EBITDA | ₹242 crores (INR 2,417 million) | +55.3% YoY; margin expanded ~0.4% on like-to-like basis, aided by core margin gains and higher-margin Comfort Click |
| Net Profit | Declined 7% YoY | Hit by amortization of acquired brands; excluding that, net profit grew 26.5% YoY |
| EPS Contribution | Comfort Click EPS accretive | Comfort Click turned EPS accretive from Q4 FY26 and continues to be so in Q1 FY27 |
| Effective Tax Rate | ~27% in Q1 | Higher due to UK thin cap disallowances; structurally ~25%, with cash component of 12–15% in FY27 |
| Organized Channel Saliency | 38% | Modern trade at 17%, digital commerce at ~21%; industry-leading position |
| A&P Spend | 18.2% of total sales | Includes Comfort Click's higher marketing intensity; like-for-like on core business similar to prior year |
Table Rules:
- Order metrics logically: Deposits → Assets → Asset Quality → Profitability → Margins → Capital
- Always include units (₹ crores, %, bps, count)
- Commentary: YoY/QoQ changes first, then brief context/driver
- Use "+/-" for changes, "bps" for basis points
- Be precise: "₹2.69 lakh crores" not "2.69L cr"
Geographic & Segment Commentary
Domestic Portfolio (ex-Comfort Click): Grew 4.6% YoY, with organized channel saliency at 38% (modern trade 17%, digital 21%). Skin & hair care (+34.5%) and food & nutrition (+16%) were the main growth engines, while seasonal brands declined 12% due to unseasonal summer showers in North and East India, particularly affecting Nycil and Glucon-D. Management noted the second half of the quarter saw growth recovery for both seasonal brands, and the portfolio is becoming less dependent on the summer season.
International Business (Comfort Click): Delivered like-to-like growth of 24.8% YoY, with no supply chain constraints. The EU (UK, France, Italy, Germany, Spain) remains the core market, while the US entry—WeightWorld D2C platform and Walmart marketplace—and Middle East expansion (Noon UAE, physical UAE base) are early but growing well. Comfort Click continues to be EPS accretive and enjoys significantly higher margins than the core business.
Complan: Grew ahead of the previous quarter despite category degrowth. Strategy rests on four pillars: revitalizing the core kids segment with premium nutrition and celebrity endorsement (Vaibhav Sooryavanshi), toddler nutrition through Complan NutriGro, adult nutrition via VieMax and VieMax Diabetes Care, and the new RTD launch Complan Powerplay Milkshake (no added sugar, no preservatives). Kids nutrition remains the growth driver.
Everyuth: Delivered strong double-digit growth, with the tan removal franchise outperforming internal expectations. Digital-first engagement expanded the user base and improved category ranking in facial cleansing from 5th to 4th. Management sees ample headroom in facial cleansing (scrubs, peel-offs, face wash) and is only piloting adjacent skin care spaces—priority remains building a sizable facial care brand.
Glucon-D: Flat quarter—double-digit growth in West and South offset by weakness in East, a high-salience market, due to frequent April–May showers. North grew moderately.
Nycil: Significantly impacted—double-digit growth in West and South negated by sharp decline in North and East, compounded by high retailer inventory from the prior year and cautious channel stocking. No rollover risk into next season given three-year shelf life and lower own inventory; positive growth on a low base already visible in recent months.
Nutralite: Strong growth driven by portfolio strength, innovation, AI-led consumer engagement, and a high double-digit six-year CAGR.
RiteBite Max Protein: Continued strong growth at more than double the historical rate, reinforcing leadership in protein snacking. Growth driven by three axes—brand building (including FIFA World Cup presence), distribution expansion (Tier 2/3 towns, selective), and portfolio enhancement (wafer bars, Roots millet-based bars, Korean-flavored chips, RTDs, Max Protein cookies). Bars remain the largest contribution but management expects each platform to scale independently.
Sweetener Portfolio: Sugarfree maintained category leadership with double-digit core growth, significantly outperforming the category. Sugarfree D'Lite delivered high double-digit growth and I'm Lite higher double-digit growth, strengthening the healthier living proposition.
CutiColour: Witnessed demand traction ahead of internal expectations with positive consumer feedback across organized retail channels.
Company-Specific & Strategic Commentary
Innovation-led Portfolio Expansion: Launched Complan Powerplay Milkshake (RTD nutrition for active kids, no added sugar/preservatives) and V-Max Diabetes Care (low GI, high-protein, high-fiber nutrition for diabetes management). Comfort Click continued multiple launches and range extensions across key categories. Management highlighted a robust 2–3 year NPD pipeline with a focus on scaling recent launches rather than just adding new ones.
Channel & Consumer Engagement Shift: Quick commerce and e-commerce remain primary growth engines with sustained strong double-digit growth. Digital commerce contributes ~21% of organized saliency; A&P spend is pivoting sharply toward digital media as consumer engagement migrates online. Core business A&P is like-for-like flat YoY at similar levels.
Comfort Click Geographic Expansion: Launched WeightWorld D2C platform in the US, entered Walmart marketplace, accelerated Middle East growth via WeightWorld and maxmedix on Noon UAE, and established a physical UAE base. Support services remain India-based. Management is cautiously optimistic on US scale-up, noting it's currently very small but growing in line with expectations.
Financing & Tax Optimization: Transitioned from GBP-denominated to Euro-denominated loan at a materially lower interest rate, reducing finance costs—savings expected to persist subject to Euro benchmark rates. Effective tax rate of ~27% in Q1 (UK thin cap disallowances) normalizes to ~25% with a 12–15% cash component in FY27, moving to full cash tax at 25% from FY28.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue growth | No formal guidance; management reiterated "double-digit" for international business | CEO explicitly declined forward-looking statements; international LTL growth of 24.8% in Q1 expected to remain sustainable at double-digit levels |
| Tax rate | ~25% effective for FY27; 12–15% cash component; full 25% cash from FY28 | Q1 came in at 27% due to UK thin cap rules; deferred tax component declines over time |
| Finance cost | Roughly stable at Q1 levels | Euro loan transition locks in lower interest; only variability is Euro benchmark rate movements |
| Comfort Click profitability | Remains EPS accretive; expect EBITDA and PBT expansion | Seasonality of September/December quarters not expected to derail positive bottom line given current momentum |
| Seasonal brands | Recovery visible on low base; positive momentum in H2 FY27 | Inventory levels lower YoY; second half of Q1 saw growth recovery; management "hopeful" of positive year outcome |
| Domestic portfolio | Balanced growth throughout the year as summer dependence reduces | Ex-seasonal brands delivering strong double-digit momentum; shipment diversification into skin care, nutrition, sweeteners |
Risks & Constraints
| Risk | Context |
|---|---|
| Weather-driven seasonality | Unseasonal summer rains in North and East India caused a 12% decline in seasonal brands (Nycil, Glucon-D). Management believes inventory shelf life (3 years) and lower own stock mitigate rollover risk; growth already returning on low base, but a second consecutive bad monsoon could prolong weakness in high-salience geographies |
| Geopolitical uncertainty | Ongoing geopolitical disruptions continue to create uncertainty, though proactive mitigation has limited impact to date. Management indicated monitoring but did not quantify exposure |
| Commodity and currency volatility | Input trends remain manageable despite divergent commodity price and currency movements, managed via disciplined pricing and premium mix. Rapid Euro benchmark moves could affect finance costs despite the loan refinancing |
| UK thin cap tax exposure | UK thin capitalization rules disallowed certain deductions, pushing Q1 effective tax rate to 27% vs. structural 25%. This is a recurring risk in the UK entity, though management expects it to normalize in the 25% effective rate |
| Category degrowth in Complan | The kids nutrition category is degrowing; Complan has outperformed for 2–3 quarters, but sustained category headwinds could limit further share gains. Management's multi-format expansion (RTD, adult nutrition) partly offsets this |
| Channel inventory build-up | Nycil faced high retailer inventory from last year, dampening off-take. While own inventory is lower YoY, channel-level stock for seasonal products remains a watch item for the next cycle |
Q&A Highlights
International Business Growth Sustainability
- Question: Was the 24.8% like-to-like international growth constrained by stock availability, and is this a sustainable run-rate? (Hardik Jatheliya, Ardeko Asset Management)
- Answer: No specific constraints; 25% is a good growth. Management does not give forward-looking statements, maintains "double-digit" as the communication boundary. (Tarun Arora, CEO)
Tax Rate and Finance Cost Outlook
- Question: What is the effective tax rate outlook for FY27 and FY28, and why did interest cost reduce QoQ? (Simran Kumari, Narnolia Financial Services)
- Answer: Q1 effective tax at 27% due to UK thin cap disallowances; otherwise 25% structural rate, of which only 12–15% is cash in FY27, moving to 25% full cash from FY28. Interest declined because the company transitioned from GBP to Euro loans at a materially lower rate; finance cost should hover around current levels unless Euro benchmark moves significantly. (Umesh Parikh, CFO)
Seasonal Portfolio Geographic Breakdown
- Question: Given delayed monsoon, what drove the 12% seasonal brand decline geographically? (Umang Shah, Banyan Tree Advisors)
- Answer: Glucon-D was flat—East was the drag (continued rains in April–May), while North/West/South saw positive momentum. Nycil had compounding issues: North and East (most salient geographies) saw sharp declines from weather and high retailer inventory from last year, while West and South grew double digits. Second half of the quarter showed recovery for both brands, not enough to close the quarter's gap but momentum is returning. (Tarun Arora, CEO)
Comfort Click Seasonality and Profitability
- Question: With high fixed costs (interest + depreciation ~INR 80–85 crores), can Comfort Click sustain positive EBITDA in seasonally weak September and December quarters? (Mayur Parkeria, Wealth Managers India)
- Answer: Comfort Click has been EPS accretive since Q4 FY26 and continues to be; with current momentum, management expects EBITDA and PBT margin expansion to continue, including in seasonally weaker quarters. (Umesh Parikh, CFO)
Comfort Click US Entry and GLP-1 Tailwind
- Question: Do Comfort Click products require prescriptions, and can the US entry be a meaningful driver over the next two years? (Mayur Parkeria, Wealth Managers India)
- Answer: All products are OTC by nature—no prescription required, and no structural change is envisaged regardless of GLP-1-driven demand. The US business is currently very small but growing in line with expectations; too early to predict its ultimate size. (Tarun Arora, CEO)
Seasonal Inventory Rollover Risk
- Question: Will the high channel inventory of seasonal products disrupt the next summer cycle? (Ronak Shah, Equirus Securities)
- Answer: Own inventory is lower than last year; product shelf life is three years, and consumers typically buy 1–1.5 packs per season. Management sees positive growth already on a low base in recent months and does not foresee rollover into next year. (Tarun Arora, CEO)
RiteBite Max Protein Offline Distribution
- Question: How is offline expansion progressing, especially in Tier 2/3 markets? (Ronak Shah, Equirus Securities)
- Answer: Distribution depth and width expansion is working well with committed resources; the approach is selective given high product value—top towns still contribute significant throughput, but the next two tiers of towns are showing good traction. Rural remains too far for now. (Tarun Arora, CEO)
Complan Turnaround and Growth Drivers
- Question: What fundamentally changed to drive Complan growth despite category degrowth? (Aniket Kamble / Unidentified Analyst, ICICI Securities)
- Answer: A consistent four-pillar strategy—core kids segment revival with better nutrition credentials backed by high-quality advertising (celebrity Vaibhav Sooryavanshi), toddler nutrition (NutriGro), adult nutrition (VieMax, VieMax Diabetes), and the new RTD format (PowerPlay). Kids nutrition remains the core driver and is a substantial part of growth; the multi-format approach is gaining consumer acceptance. (Tarun Arora, CEO)
Protein Portfolio Mix Evolution
- Question: How will revenue mix within the protein portfolio evolve over three years—will bars remain the largest? (Parth Sodha, Trinetra Asset Managers)
- Answer: Hard to predict—each platform (bars, snacks, RTD) has substantially large possibilities and is driven with equal conviction. Bars are currently the largest, but a different mix three years out is plausible. (Tarun Arora, CEO)
Everyuth Adjacent Category Expansion
- Question: Beyond facial cleansing, does Everyuth see opportunity in adjacent skin care categories while maintaining profitability? (Parth Sodha, Trinetra Asset Managers)
- Answer: Core remains facial cleansing with significant headroom (scrubs, peel-offs, face wash); new propositions (tan removal, anti-pollution) are in the pipeline. Adjacent categories will be piloted and explored but only scaled once sizable—priority is building Everyuth into a sizable skin care brand profitably. No B2B expansion planned. (Tarun Arora, CEO)
RiteBite SKU Expansion Post-Acquisition
- Question: Has SKU expansion driven growth beyond the core portfolio acquired (acquired at ~INR 120–130 crores in Q3 FY24)? (Mayur Parkeria, Wealth Managers India)
- Answer: Lead products from acquisition continue to drive core growth, but expansion into newer spaces—millet-based wafer bars, Roots (ghee, jaggery, dates), Korean-flavored chips, RTDs, and Max Protein cookies—is reaching new consumers and accelerating acceptance. The expanded portfolio, not just core SKUs, is driving growth. (Tarun Arora, CEO)
A&P Spend and Digital Pivot
- Question: What is A&P as a percentage of sales, and has it increased YoY? (Aniket Kamble, ICICI Securities)
- Answer: 18.2% of total sales including Comfort Click (which carries a higher marketing ratio); like-for-like on the core business, A&P is flat versus last year. Digital spend as a share of overall investment is rising sharply across platforms as consumer engagement migrates digital. (Tarun Arora, CEO)
Key Takeaway
Zydus Wellness delivered consolidated net sales of ₹1,430 crores (+66.7% YoY) in Q1 FY27, driven by Comfort Click consolidation, while EBITDA grew 55.3% to ₹242 crores with 0.4% like-to-like margin expansion. The domestic business grew just 4.6%, with skin & hair care (+34.5%) and food & nutrition (+16%) offsetting a 12% seasonal brand decline from unseasonal summer rains in North and East India—Nycil bore the brunt amid high channel inventory. International like-to-like growth of 24.8% was healthy, with Comfort Click remaining EPS accretive and expanding into US D2C, Walmart, and Noon UAE. Management's strategy centers on premium, science-led innovation—Complan Powerplay RTD, V-Max Diabetes Care, and expanded RiteBite SKUs—supported by industry-leading 38% organized channel saliency and a digital-first A&P pivot. Tax rate normalizes to ~25% (12–15% cash in FY27) with finance costs reduced via Euro loan refinancing. Watch-outs include seasonal brand recovery momentum into H2, US Comfort Click scaling, and category degrowth in kids nutrition. The company guides to continued momentum on a diversified, less summer-dependent portfolio without formal numeric guidance.