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    Zota Health Care

    ZOTA
    Healthcare·25 May 2026
    Management Summary

    Zota Health Care reported strong financial performance for FY26, driven by robust growth in its Davaindia retail business, which saw sales nearly double and the store network expand significantly. The company achieved positive EBITDA and substantial gross margin expansion due to its integrated business model. Management plans to moderate store expansion in the near term to prioritize store-level profitability and operational efficiency, while maintaining a long-term vision for continued growth.

    Highlights

    5

    • Consolidated revenue from operations for FY26 stood at INR 53,865 lakhs, registering a robust Y-o-Y growth of 83.86%.

    • Davaindia sales grew sharply to INR 41,741 lakhs, nearly doubling from last year.

    • Consolidated gross profit increased to INR 32,468 lakhs, representing strong growth of over 108% Y-o-Y, with gross margin expanding to 60.28%.

    • Achieved a positive EBITDA of INR 2,597 lakhs for FY26, with EBITDA margin improving to 4.82%.

    • Added 997 new Davaindia stores in FY26 (804 COCO, 193 FOFO), taking total network to 2,579 stores.

    Concerns

    2

    • Moderate pace of expansion for upcoming 1 or 2 quarters to focus on improving store-level profitability and optimizing operational efficiency.

    • Potential moderation of overall growth rates if store additions slow down significantly, though management expects 25-30% growth even without new stores.

    Key financials

    Metrics

    8

    Periods

    3

    Headline

    4
    • Consolidated Revenue
      53,865 lakhs
      YoY+83.9%
    • Davaindia Sales
      41,741 lakhs
    • Consolidated Gross Profit
      32,468 lakhs
      YoY+108%
    • Gross Margin
      60.3%

    Q4

    2
    • EBITDA
      1,191 lakhs
    • EBITDA Margin
      7.3%

    FY26

    2
    • EBITDA
      2,597 lakhs
    • EBITDA Margin
      4.8%

    Segment breakdown

    Davaindia Retail
    77% Revenue Contribution
    Domestic Formulation
    13% Revenue Contribution
    Export Operations
    6% Revenue Contribution
    Everyday Herbal
    3% Revenue Contribution
    List

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹114 crores

    M&A

    Everyday Herbal Beauty Care Limited

    acquisition · closed

    Guidance & targets

    9
    CategoryTargetPriority
    Store Expansion
    New store additions
    500 to 700 stores
    		High
    Store Expansion
    Total Davaindia stores
    5,000+ stores
    		High
    Store Expansion
    COCO/FOFO mix for new stores
    80% to 90% COCO
    		High
    Store Expansion
    New store additions
    200+ stores
    		High
    Store Expansion Pace
    Pace of expansion
    slow down
    		High
    Store Expansion Pace
    Pace of expansion
    ramp up
    		High
    Gross Margin
    Gross Margin
    further improvement
    		Medium
    Marketing Spend
    Marketing spend as % of sales
    similar range
    		High
    Overall Growth Rate
    Growth rate (without new stores)
    25%-30%
    		High

    Store expansion pace (Q2/Q3 FY27)

    Next quarter (Q2 FY27)
    CurrentContinuing store additions in Q1 FY27
    TargetSlow down the expansion during Q2 and Q3 FY27

    Why it matters

    To verify if the company adheres to its stated strategy of moderating expansion for profitability focus, impacting overall growth rates.

    In terms of phasing, we are intentionally moderating the pace for a couple of quarters... we plan to slow down the expansion during Q2 and Q3, possibly for one or two quarters.

    How to verify

    guidance_and_targets

    Risks & concerns

    2
    RiskSeverity

    Moderated pace of store expansion

    The company plans to slow down store additions for Q2 and Q3 FY27 to focus on improving store-level profitability and operational efficiency. — Management acknowledged

    medium

    Underperforming older stores

    A very small number (1-1.5%) of stores older than two years might be underperforming, but the closure rate would be extremely low. — Management downplayed

    low

    Q&A highlights

    8

    “for the next couple of quarters, focus will be on improving the store-level profitability, while we will continue a moderate pace of store expansion.”

    Clarifies the company's strategy of balancing growth with profitability, indicating a temporary slowdown in store additions to optimize existing operations.

    asked by Chintan Sheth

    2 min read6 chapters

    Detailed Narrative

    01

    Davaindia's Robust Growth and Expansion

    Davaindia, the company's retail pharmacy chain, emerged as the primary growth engine, contributing approximately 77% of overall revenue in FY26. Sales for Davaindia grew sharply to INR 41,741 lakhs, nearly doubling year-on-year. The company achieved a record expansion, adding 997 new Davaindia stores in FY26, comprising 804 COCO and 193 FOFO stores, bringing the total network to 2,579 stores nationwide.

    02

    Strong Financial Performance and Margin Expansion

    Zota Health Care reported a robust consolidated revenue from operations of INR 53,865 lakhs for FY26, marking an 83.86% Y-o-Y growth. Gross profit increased by over 108% Y-o-Y to INR 32,468 lakhs, with the gross margin expanding by 714 basis points to 60.28%, driven by scale benefits and improved product mix. The company achieved a positive EBITDA of INR 2,597 lakhs for FY26, with the EBITDA margin improving to 4.82%, and Q4 EBITDA stood at INR 1,191 lakhs with a 7.3% margin.

    03

    Strategic Focus on Profitability and Moderate Expansion

    While maintaining strong growth momentum, Zota Health Care plans to moderate its pace of expansion for the upcoming one to two quarters (Q2 and Q3 FY27). This calibrated approach aims to improve store-level profitability and optimize operational efficiency. Despite this, the company remains confident in its long-term vision of scaling to over 5,000 Davaindia stores by FY29, with a target of opening 500 to 700 new stores in FY27, predominantly COCO format.

    04

    Sustainable Same-Store Growth (SSG) Across Cohorts

    The company reported strong same-store growth (SSG) across its store cohorts. Stores operational as of March 2025 achieved an overall SSG of over 40% in FY26. More mature stores (2-5 years vintage) delivered approximately 24% year-on-year SSG, while stores aged 12-24 months achieved an even stronger SSG of 35% to 40%. Management indicated that stores typically reach a steady-state monthly sales level of INR 6 lakhs to INR 7 lakhs within 3-5 years.

    05

    Brand Building and Diversification Initiatives

    Zota Health Care reinforced its brand visibility and consumer trust through strategic associations with renowned personalities like Mr. Suniel Shetty and Mr. MS Dhoni. The company also increased its stake in Everyday Herbal Beauty Care Limited to 87.78%, strengthening its backward integration strategy. New initiatives like UGO Generic and All Day Stores are being explored to further penetrate the affordable healthcare market, with UGO Generic potentially serving as a B2B platform and All Day Stores focusing on health and wellness products.

    06

    Capital Expenditure and Working Capital Management

    The company incurred approximately INR 114 crores in capital expenditure for FY26, primarily in anticipation of upcoming store openings. Inventory levels have increased due to planned store expansion. Payable days improved this quarter, mainly due to compliance with MSME regulations, which require payments to MSME suppliers within 45 days, impacting approximately 70% of the company's procurement.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.