Zydus Wellness Limited — Q3 FY26 earnings call

Call held 3 Feb 2026

Management summary

Zydus Wellness reported robust Q3 FY26 results, driven by a 113.7% increase in net sales and a 312.2% surge in EBITDA, reaching INR610 million. The gross margin expanded significantly to 63%, primarily due to the full quarter inclusion of the high-margin Comfort Click business, which is also cash EPS accretive. While the Personal Care segment saw a slight decline, the Food & Nutrition segment grew by 134%, and RiteBite Max Protein achieved double-digit margins. The company is focused on integrating acquisitions, expanding distribution, and launching new products, with a long-term target of 16-18% EBITDA margins for the base business.

Highlights

  • Net sales for Q3 FY26 registered growth of 113.7%.

  • Consolidated EBITDA recorded INR610 million, representing a quarter year-on-year growth of 312.2%.

  • EBITDA margin expanded to 6.3%, up from 3.2% in the previous year.

  • Gross margin jumped to 63% primarily due to the inclusion of Comfort Click business.

  • Comfort Click acquisition remains cash EPS accretive even after accounting for interest and tax.

  • RiteBite Max Protein's EBITDA improved from breakeven at acquisition to levels approaching double-digit margins.

Concerns

  • Personal Care segment declined by 1.4% during the quarter.

  • Other operating income declined year-on-year due to GST budgetary support of INR90 million recognized in Q3 FY25.

  • Net loss (including exceptional items and noncash amortization) was INR399 million.

  • Adjusted net loss (excluding exceptional items) was INR333 million.

  • Everyuth and Nycil performance was lower in the quarter, impacted by seasonality and trade sentiment.

Key financials

  1. Net Sales Growth 113.7% +113.7%YoY
  2. Consolidated EBITDA 610 Mn +312.2%YoY
  3. EBITDA Margin 6.3%
  4. Previous Year EBITDA Margin 3.2%
  5. Gross Margin 63%
  6. Finance Costs (Interest Expense) 371 Mn
  7. Amortization 472 Mn
  8. Net Loss (incl. exceptional items) 399 Mn
  9. Adjusted Net Loss (excl. exceptional items) 333 Mn

What they filed

Q1 FY27: revenue up 66.9%, net profit down 7.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue493 462 913 861 650 +32%965 +109%1,485 +63%1,437 +67%
EBITDA20 15 190 156 23 +15%61 +307%270 +42%242 +55%
Net profit21 6 172 128 -53 −352%-40 −767%162 −6%119 −7%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Food & Nutrition
    134% Growth
  • Personal Care
    -1.4% Growth
  • Volumes (excl. Comfort Click)
    double-digit % Growth
  • YTD (excl. Comfort Click & seasonal brands)
    double-digit, high teens % Growthmid-teen % Volume Growth

Capital allocation

high confidence
  • Debt Debt disclosed Cost 5%
    • New borrowing Acquisition funded through a low-cost bridge loan at 5%
    acquisition was funded through a low-cost bridge loan at 5% with the related interest expense reflected under finance costs amounting to approximately INR371 million for the quarter 3.
  • M&A Comfort Click Acquisition · Integrated

    Strengthened position in high-growth Wellness categories, expanding European footprint.

    Cash EPS accretive even after accounting for interest and tax. Contributed to gross margin expansion and higher ad spends.

    Comfort Click acquisition remains cash EPS accretive even after accounting for interest and tax.
  • M&A RiteBite Max Protein Acquisition · Integrated

    Leadership position in protein snacking.

    EBITDA improving from breakeven at acquisition to levels approaching double-digit margins.

    RiteBite Max Protein business continues to significantly outperform its internal expectations across both value and volume metrics. The brand retains its leadership position in protein snacking with EBITDA improving from breakeven at acquisition to levels approaching double-digit margins

Guidance & targets

Profitability

  • Comfort Click EBITDA Margins Profitability · ongoing · High confidence 14%+
    And hopefully, with that business operating between 14% plus kind of EBITDA margins.

    — Tarun Arora

  • Base Business EBITDA Margins Profitability · next 1-2 years · High confidence 16-18%
    Our base business, we are where it was, and we are looking at taking it to 16%, 17%, or 18% levels, which is work in progress.

    — Tarun Arora

  • EPS Accretion (Acquired Entities) Profitability · from next financial year onwards · High confidence EPS accretive at PAT level
    And from next financial year onwards, we'll have even EPS accretive P&L even for the new entity newly acquired entity.

    — Umesh Parikh

Revenue

  • Max Protein Revenue Scale Revenue · 2 years · Medium confidence INR500 crores
    Hypothetically, yes. I can't comment on the specifics. But yes, of course, it's possible. There is a good potential in this.

    — Tarun Arora

What to watch in Q4 FY26

Improved Segmental Disclosure

By end of the year (2026)
Current Current limited disclosure
Target Better visibility on segmental data

Why it matters

Essential for tracking performance of the increasingly complex portfolio, especially with new acquisitions.

No, no, your point is noted, Tejash. We are aware of it. So over the next few months, by end of the year, we'll come back and work on some of these things so that we can give you a better visibility.

Risks & concerns

  • Seasonality and trade inventory impact on Nycil/Glucon-D

    medium

    Calendar year 2025 seasonality was worse than prior 6-8 years, impacting trade channel inventory for Nycil and Glucon-D. Actions taken to clean up inventory.

    Management acknowledged

  • Lower performance of Everyuth and Nycil in Q3

    low

    Everyuth and Nycil performance was lower, but management views it as a one-off quarter due to trade sentiment and remains steadfast on long-term trends.

    Management downplayed

Q&A highlights

7 direct
Gross Margin jump and baseline for combined portfolio Direct
Yes. So Tejash, the gross margin jumped because of combination of the business, mainly the Comfort Click business coming in for the whole quarter. And therefore it has jumped to where it is where you can see it right now. ... So keeping aside the seasonality, on an annualized basis, you can assume it about 66%, 67% on a consolidated basis on an annualized basis.

Clarifies the significant increase in gross margin is primarily due to the higher-margin Comfort Click acquisition and provides an annualized baseline for the combined entity.

Asked by Tejash Shah

Comfort Click cost structure and seasonality of A&P spend Direct
This is the new normal because, I mean, the increase in advertisement expenses is largely because Comfort Click operates at a certain expenses, which are variable in nature due to high marketing spends, which are linked to digital marketing that they do. And that's in sync with their business scale. So this would be a new normal and this is a full quarter view how it will shape up.

Explains that higher A&P is a 'new normal' due to Comfort Click's digital marketing model, indicating a structural shift in cost profile rather than a one-off seasonal spike.

Asked by Tejash Shah

Sustainable EBITDA margins for next 2 years Direct
I think Comfort Click, we are looking at continued growth of top line in good double-digits, as we have mentioned. And hopefully, with that business operating between 14% plus kind of EBITDA margins. Our base business, we are where it was, and we are looking at taking it to 16%, 17%, or 18% levels, which is work in progress.

Provides specific EBITDA margin targets for both the acquired Comfort Click business and the legacy base business, outlining the company's profitability aspirations.

Asked by Tejash Shah

Comfort Click growth drivers (existing markets vs new geographies) Direct
I think the big reliance will remain on growing the existing markets because there is enough room to grow, where their focus is within Europe to grow more reliably, increasing their share of D2C performance. ... They've entered new markets, still very small, but promising, which is these Poland, Finland, et cetera. U.S. also still very small.

Highlights the primary growth strategy for Comfort Click is deepening penetration in existing European markets, with D2C as a key channel, while new geographies are still nascent.

Asked by Tejash Shah

Comfort Click integration and employee retention Direct
So I think a simple answer is that over the last 4 months, we have not seen any significant surprises upside or downside for the business. ... We have committed to a long-term LTIs, long-term incentive program for critical employees. And we are working with them closely, both in trying to engage with them and help them work through their business in the right way.

Assures investors that the Comfort Click integration is proceeding smoothly without major surprises and that critical talent retention is being addressed through long-term incentives.

Asked by Mayur Parkeria

Impact of new MAT provisions on tax rate Partial
So there was a budget announcement just a couple of days before, and our team is working on finalizing the impact on the of this revised MAT as well as evaluating the setup of the MAT as per the new regime. And our team will be ready with the analysis in about a week's time.

Indicates an upcoming clarification on the impact of new tax regulations, which could affect future profitability and tax outflow.

Asked by Kinjal Mota

Plans to introduce Comfort Click's vitamins/supplements portfolio in India Direct
I think from a Comfort Click U.K.-based entity, they would first want to, where should I be? And I think Europe and U.S. are much larger, much potentially bigger markets to play, have a more similar opportunity. ... So India falls a little lower on priority, we'll obviously evaluate.

Clarifies that while India is a long-term consideration, the immediate priority for expanding the Comfort Click portfolio is larger international markets like Europe and the US.

Asked by Sandeep Abhange

Q3 base business margins and long-term targets Direct
Yes, it would have been lower. There are 2 or 3 anchors in it. One of the points I also made in my speech was also there's almost INR90 million GST, which was budgeting support, which was in the last quarter, and some of the additional expenses in terms of investing in the additional people field that we have created. So some of those expenses have impacted the margin.

Explains the reasons for lower base business margins in Q3 (absence of prior year's GST support and increased investments), reassuring that the long-term target of 16-18% remains valid.

Asked by Mayur Parkeria

3 min read 7 chapters

Detailed narrative

Strong Revenue and EBITDA Growth Driven by Acquisitions

Zydus Wellness reported a significant increase in net sales by 113.7% for Q3 FY26, with consolidated EBITDA growing 312.2% to INR610 million. This led to an EBITDA margin expansion to 6.3% from 3.2% in the prior year. The substantial growth was primarily attributed to the full quarter inclusion of the Comfort Click business and strong performance from the Food & Nutrition segment, which grew by 134%.

Gross Margin Expansion and Cost Structure Shift

The company's gross margin jumped to 63% in Q3 FY26, largely due to the higher-margin profile of the newly acquired Comfort Click business. Management clarified that the increased advertisement expenses are a 'new normal' for Comfort Click, as its digital marketing model involves variable, high marketing spends. This indicates a structural shift in the overall cost architecture, rather than a temporary seasonal effect.

Acquisition Performance and Integration

Both Comfort Click and RiteBite Max Protein acquisitions are performing well. Comfort Click is operating in line with expectations and is cash EPS accretive, despite significant interest (INR371 million) and amortization (INR472 million) costs. RiteBite Max Protein has improved its EBITDA from breakeven at acquisition to double-digit margins. The company is actively integrating these businesses, focusing on talent retention through long-term incentives and ensuring smooth operations.

Strategic Focus on Existing Markets and D2C for Comfort Click

For Comfort Click, the primary growth strategy is to deepen penetration in existing European markets, leveraging D2C channels to build long-term customer value. While new markets like Poland, Finland, Portugal, and the US have been entered, they are currently very small. The company is also tracking key KPIs such as repeat purchase rates (above 50% on marketplaces) and brand ratings (above 4.6 out of 5).

Base Business Performance and Long-Term Margin Targets

The base business, excluding Comfort Click and seasonal brands, delivered double-digit growth in YTD FY26. While Q3 base business margins were lower due to the absence of INR90 million GST budgetary support from the prior year and increased investments, management reiterated its long-term target of achieving 16-18% EBITDA margins for the base business within the next 1-2 years. Short-term margin fluctuations are viewed as acceptable for building future growth.

Challenges in Personal Care and Seasonal Brands

The Personal Care segment experienced a 1.4% decline in Q3. Brands like Everyuth and Nycil saw lower performance, attributed to seasonality and trade sentiment, with calendar year 2025 being particularly challenging for Nycil/Glucon-D due to worse-than-usual seasonality impacting trade inventory. Management has taken actions to clean up inventory and expects a recovery in the upcoming season, which typically starts in March-April.

Upcoming Clarifications and Future Outlook

The company's team is actively working to finalize the impact of the recently announced MAT provisions on the tax rate, with information expected to be disseminated within a week. Management also committed to improving segmental disclosures by the end of the year to provide better visibility on its increasingly complex portfolio. From next financial year onwards, the company expects to be EPS accretive at the PAT level, even for the newly acquired entities.

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