Zydus Wellness

Zydus Wellness reported robust financial performance for Q4 FY26, with net sales growing by 62.1% and EBITDA increasing by 42.2% to INR 270.1 crores. For the full fiscal year 2026, net sales grew 46.4% and EBITDA rose 34.2% to INR 509.7 crores. However, net profit declined by 5.8% in Q4 and 43.2% for the full year, primarily due to finance costs associated with acquisitions and amortization of acquired brands. Excluding these exceptional item^📎s and amortization, net profit grew 17% in Q4 and 2.3% for FY26.

The domestic business grew by 1.7% in Q4 FY26 and 2.4% for the full year. This growth was significantly impacted by seasonal brands, which declined by 9.8% in Q4 and 18.8% for FY26, largely due to delayed summer and unseasonal rains, particularly in North and East regions. In contrast, skin and hair care brands showed strong growth of 39.7% in Q4 and 21.9% for FY26, while food and nutrition brands grew 9.4% in Q4 and 15.5% for FY26. The company expects recovery in seasonal brands from May onwards.

The international business, primarily driven by Comfort Click, delivered a strong like-to-like growth of 31.4% in Q4 FY26 and 29.5% for the full year. Comfort Click has become EPS accretive in Q4 FY26 and is expected to maintain this status for the next two years. The company is expanding its European presence and making early bets in markets like the U.S. and UAE, leveraging its online-first model and rapid product innovation in the VMS space. This acquisition is seen as a key driver for future growth and digital capabilities.

Innovation remains a core driver, with several new product launches and extensions. Under RiteBite Max Protein, offerings expanded with Ultimate Protein Boost Ready-to-Drink beverage, Ghee Jaggery Bar, and Korean flavor chips. Sugar Free D'lite added a Choco Spread variant, strengthening its presence in organized channels. Everyuth launched a Tan Removal Face Wash, and Glucon-D entered performance hydration with Recharge liquids and sachets. These initiatives aim to enter new demand spaces and deepen category relevance.

Zydus Wellness is increasingly leveraging quick commerce and e-commerce, which are sustaining strong momentum. Quick commerce now contributes 7-8% of the total business and 44-45% of e-commerce. The company's products and new introductions are designed to be relevant for these channels, helping to gain share. The learnings from Comfort Click's online-first business model are being applied to sharpen the overall company strategy, aiming for a more digital future where online channels contribute significantly to the business.

The company's gross margins are in line with planned expectations, but the underperformance of seasonal brands, which have higher gross margins, impacted overall PBT and PAT in Q4. Management reiterated its aspiration to achieve an EBITDA margin of 17-18% in the next couple of years, excluding Comfort Click. They expect operating leverage to play out across the business, contributing to EBITDA as a percentage of sales. The Comfort Click business itself is largely variable spend and has good margins.

For FY27-28, the consolidated tax rate is expected to be in the 25% bracket. For FY26-27, the tax rate will be a mix of cash tax and deferred tax asset utilization, also expected to be around 25%. Management confirmed that for FY28, it anticipates a full cash tax rate at 25%.