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Conference Call Details • Date: August 2, 2024 • Submission Date: August 7, 2024 • Hosted by: ICICI Securities • Key Management Present: • Dr. Sharvil Patel (Chairman) • Mr. Tarun Arora (CEO) • Mr. Ganesh Nayak (Director) • Mr. Umesh Parikh (CFO) • Compliance: SEBI regulations on disclosure
Financial Performance Highlights • Sales Growth: 20% year-on-year increase in consolidated net sales • Segment Contributions: • Personal Care: 41.8% growth • Food & Nutrition: 15% growth • New Products Launched: Complan Immuno-Gro, Nutralite offerings • Financial Metrics: • EBITDA: 33.3% increase • Net Profit: 33.8% rise • Debt Management: Fully repaid debt, strong cash position • Future Goals: Double-digit revenue growth, EBITDA margins target of 17-18% in 2-3 years
Key Inquiries and Responses • Expansion of OPA Margins: Targeted increase from 13-14% to 17-18% in the next couple of years. • Capex for FY '25: Estimated at INR 30-35 crores for maintenance and capacity expansion, funded through cash flows. • Summer vs. Non-Summer Growth: Expectation of consistent double-digit growth despite seasonal impacts. • Gross Margin Improvements: Attributed to commodity deflation and premiumization efforts. • Employee Costs: Notable rise due to occupancy increases and transition to government provident fund.
Product and Market Insights • Sugar Free Reformulation: Expected to support consumer recruitment and maintain growth. • New Product Revenue Share: Aiming for 6-8% contribution within three years. • E-commerce Trends: Shift in consumer behavior towards quick commerce noted. • Talc Products: Decline in sensorial talcs, but functional talcs performing well.
Future Outlook • Seasonality Impact: Anticipated lower revenue and margins in Q2 and Q3. • Rural vs. Urban Demand: Rural demand outpacing urban, with optimism for sustained growth due to favorable conditions. • New Product Launches: Seven new products launched last quarter, with four more planned.
Strategic Discussions • Hedging Policy: Focus on short to medium-term hedging (2-3 months). • Consultant Costs: INR 20 crores for the quarter, performance-linked fees. • Product Adaptation: Continuous adjustments in packaging and pricing for rural consumers.
Conclusion • Management's Optimism: Positive outlook for growth driven by existing and new products, with prudent cost and capital management.
Zydus Wellness Q4 FY2024 Earnings Conference Call Summary
Call Details • Date: May 14, 2024 • Hosted by: ICICI Securities • Key Management Present: • Dr. Sharvil Patel (Chairman) • Mr. Tarun Arora (CEO) • Mr. Ganesh Nayak (Director) • Mr. Umesh Parikh (CFO) • Moderator: Mr. Karan Bhuwania • Format: Q&A session for institutional investors and analysts; recorded for reference.
Financial Performance • Net Sales Growth: 9.6% year-on-year • Volume Increase: 5.5% • Profit After Tax: Rs. 1,503 million (24.7% year-on-year increase) • EBITDA Decline: 8.6% • Outlook: Optimism for future growth due to improved macroeconomic conditions and product innovations.
Key Highlights • Demand Recovery: Positive trends in FMCG sector, especially in rural areas. • Brand Performance: Strong results from Glucon-D and Nycil; double-digit growth in personal care. • Food and Nutrition Segment: Signs of revival, particularly for Complan and Sweeteners.
Management Insights • Retail Performance: Positive outlook despite lagging market share data; increased advertising and promotional spending. • Gross Margins: Projected manageable inflation; targeted EBITDA margin of 17-18% over the next two years. • Summer Sales: Generally good season; strategies in place to improve market share.
Product-Specific Updates • Complan: 6.5% growth; no significant impact from regulatory changes. • Sugar-Free Segment: Consistent double-digit growth for Sugar Free Green; efforts to recruit new consumers. • Sweetener Portfolio: Sugar Free Green and I'm Lite identified as key growth drivers.
Future Plans • Distribution Expansion: Aim to increase touchpoints from 3 million to 3.5 million outlets in two years. • International Business: Contributes 3.5%-4% to total revenue; growth expected in GCC and Indian subcontinent markets.
Financial Health • Debt Status: Company is debt-free with net cash levels at approximately Rs. 8 lakhs. • Cash Flow: Discussions on cash levels and performance of food and nutritional portfolio.
Conclusion • Overall Outlook: Recovery expected in food and nutrition categories; optimism for sustained demand and retail performance as summer progresses.
Zydus Wellness Q3 FY2024 Earnings Conference Call Summary
Key Management Participants • Dr. Sharvil Patel (Chairman) • Mr. Tarun Arora (CEO) • Mr. Ganesh Nayak (Director) • Mr. Umesh Parikh (CFO)
Market Overview • Ongoing demand pressures in the FMCG sector, especially in rural areas. • Strong growth in the personal care segment, particularly the Everyuth brand. • Food and nutrition segment facing brand-specific challenges, notably Nutralite.
Financial Performance • Consolidated net sales declined by 3.1% year-on-year. • Gross margin improved despite a decrease in EBITDA by 51.1%. • Advertising expenses increased by 11.8%.
Operational Highlights • Market share growth for brands like Glucon-D and Everyuth. • Q&A segment addressed financial queries, including tax adjustments.
Tax and Future Outlook • Umesh Parikh confirmed a nil tax rate for FY '24 and FY '25 due to MAT entitlement in Sikkim. • Tarun Arora expressed optimism for growth starting in Q4 FY '24, aiming for double-digit growth in FY '25.
Product Performance • Issues with Sugar Free products due to absence of SugarLite and muted Aspartame demand. • Stevia-based Sugar Free Green showing consistent growth. • Complan remains competitive but requires time for improvement.
Distribution and Market Strategy • Revised distribution target of reaching 3.5 million outlets in three years. • 16% increase in Complan's household penetration reported.
Future Initiatives • Planned product launches and distribution initiatives to drive growth. • Optimism for a strong Q4 performance driven by seasonal demand.
International Business and Pricing Strategy • Double-digit growth in international business, despite challenges in Nigeria. • Mixed approach to price increases across brands to improve gross margins.
Shareholder Returns and Growth Potential • Focus on enhancing gross margins and overall profitability. • Growth potential in Everyuth skincare line and updates on Immunovolt and Sugar Free products.
Conclusion • Tarun Arora expressed optimism for 2024 and thanked participants for their engagement.
Key Management Participants • Dr. Sharvil Patel (Chairman) • Mr. Tarun Arora (CEO) • Mr. Ganesh Nayak (Director) • Mr. Umesh Parikh (CFO)
Performance Highlights • FMCG Segment: • Urban demand growing; rural demand struggling due to food prices and weather. • Personal Care Segment: • Strong growth, especially for Nycil and Everyuth brands. • Sweetener Segment: • Challenges due to trademark litigation affecting Sugar Lite; flat growth in food and nutrition.
Financial Overview • Net Sales: Increased by 2.6% to Rs. 4,379 million. • EBITDA: Rose by 3.7% to Rs. 168 million. • Net Profit: Fell by 30.6% to Rs. 59 million due to deferred tax liability. • Outlook: Optimistic about margin recovery and demand growth during festive season.
Volume and Market Trends • Consumer Penetration: Structural improvement over four years contributing to volume growth. • Volume Growth: Flat for the quarter; steady performance in Food and Nutrition brands. • Personal Care Brands: Achieved double-digit growth. • Sugar Lite: Contributes 3-5% to total turnover; ongoing litigation with no clear resolution timeline.
Margin and Growth Projections • EBITDA Margins: Aiming for 17-18% over the next few years. • Revenue Growth: Expecting return to double-digit growth driven by strong portfolio and consumer base. • Long-term Projection: 10% return on equity within three years.
Strategic Focus • Ayurvedic Expansion: No immediate plans, but business development remains a focus. • Advertising Spend: Acknowledged flat spend; plans to increase as gross margins improve. • Raw Material Costs: Optimism for improved margins in the second half of the year.
Sales Growth Strategies • Distribution Channels: Expanding in general trade and e-commerce; challenges noted in general trade sector. • Outlet Expansion: Aiming to significantly increase the number of outlets stocking Zydus Wellness products.
Investor Inquiries • Buyback Status: No current discussions on buyback. • Complan Seasonality: No structural change expected in seasonality over the next 2-3 years. • Promoter Family Share Purchases: Management could not comment on potential purchases.
Conclusion • Management offered season's greetings and indicated plans to reconvene after the next quarter.
Zydus Wellness Limited 29th AGM Summary
Meeting Overview • Date: August 3, 2023 • Submission of transcript on August 23, 2023 • Conducted via video conference • Key attendees: Chairman Dr. Sharvil P. Patel, Company Secretary Nandish P. Joshi
Financial Performance • Total income from operations increased by 12.2% year-on-year to Rs. 22,548 million for FY 2022-23 • Challenges faced: inflation and contraction in gross margins • Ceased operations at Sitarganj manufacturing facility to enhance efficiency
Strategic Goals • Focus on market share expansion through innovation and improved distribution • Significant penetration increases for key brands • Commitment to operational excellence and responsible business practices
Voting Procedures • Compliance with Companies Act, 2013 • Remote e-voting available from July 31 to August 2, 2023 • Eight resolutions to be voted on, including financial statements and director appointments • Results to be published on the company’s website and filed with stock exchanges
Shareholder Interactions • Shareholders expressed appreciation for financial performance • Inquiries about subsidiaries, product availability, and inflation impact • Suggestions for maintaining virtual AGMs and enhancing market presence
Key Concerns Raised • Mr. Tejas Shah highlighted: • Pandemic impact and rising raw material costs • Competition from market players like Patanjali • Financial queries regarding property acquisitions and advertising expenses
Management Responses • Chairman acknowledged inflation and commodity price challenges • CFO addressed low return on equity and working capital changes • Emphasis on strategic expansion, particularly in international markets
Financial and Operational Insights • Return on equity impacted by goodwill; aim to increase it to 10% in 3-4 years • Issues with inventory turnover and increased expenses due to wage hikes • Losses reported by Zydus Wellness Bangladesh in early operational stages
Product Popularity and Growth • CEO highlighted popularity of products like Sugar Free and Nutralite DoodhShakti • Importance of expanding both offline and online distribution channels • Anticipated growth in international business to outpace domestic growth
Conclusion • Chairman thanked participants and reminded them about the e-voting process.
Zydus Wellness Q1 FY2024 Earnings Conference Call Summary
Performance Overview • Net Sales: Grew by 0.9% to INR 6,992 million. • EBITDA: Decreased by 21.3% to INR 1,165 million due to: • Increased costs from alternative fuels. • Wage hikes. • Key Product Challenges: • Glucon-D sales impacted by unseasonal weather. • Positive growth in Complan and Sugar Free.
Strategic Focus • Marketing Initiatives: Enhancing international presence and digital capabilities. • Consumer Communication: Ongoing efforts to strengthen brand equity, particularly for Nycil.
Segment Insights • Prickly Heat Powder (Nycil): • Strong brand equity; no significant changes in market dynamics. • Health Food Drink (HFD) Segment: • 12% increase in household acquisition; slight market share decline due to raw material price inflation. • Stable milk prices could allow for price increases to recover margins.
Market Dynamics • Consumer Preferences: Shifting towards premium products amidst inflationary pressures. • Lower Price Points: Negative impact on overall pricing structure in the HFD category.
Margin Outlook • Gross Margins: Improvements expected due to commodity price deflation (excluding milk). • Profitability Target: Aiming for 17% to 18% profitability range in the next 2-3 years.
Product Focus • Key Brands: Emphasis on Sugar Free and Everyuth. • Skincare Segments: Growth linked to specific occasions; potential for online sales.
Challenges and Opportunities • Sugar Free Growth: Mid-single-digit growth attributed to negative perceptions; plans for new product launches. • Glucon-D Performance: Seasonal impacts acknowledged; confidence in achieving growth compared to the previous year.
Future Outlook • Revenue Growth: Optimism for double-digit growth in FY '24 despite pricing pressures and high base from Q1. • Volume Growth Sustainability: Focus on expanding consumer base and managing seasonal disruptions.
Conclusion • Management remains optimistic about future growth despite current challenges, with strategic investments and product launches planned to support this outlook.
Zydus Wellness Limited Q4 FY2023 Earnings Conference Call Summary
Date and Participants • Date: May 17, 2023 • Key Management Members: • Dr. Sharvil Patel (Chairman) • Mr. Tarun Arora (CEO) • Mr. Ganesh Nayak (Director) • Mr. Umesh Parikh (CFO)
Financial Performance • Net Sales Growth: • Q4: 11.8% year-on-year, totaling INR 7,099 million • Fiscal Year: 12.8% increase • Gross Margin: • Q4: 50.6%, recovering from previous declines • Net Profit: • Q4: INR 1,453 million, up 9% year-on-year
Marketing and Product Innovations • Successful initiatives across brands: • Glucon-D, Complan, Sugar Free, Everyuth • Maintained or improved market positions
Key Inquiries and Management Responses • One-off Expenses: • Nearly half of the overall increase attributed to these expenses • Bournvita Issue: • No significant impact on consumption or market dynamics • International Business Growth: • Challenges in New Zealand and Nigeria; flattish growth for FY '23 • WHO Notification on Sugar-Free Products: • No significant effects anticipated • Nutralite B2B Acceptability: • Positive traction reported • Everyuth Brand Growth: • Double-digit growth, especially in scrubs and peel-off masks
Distribution and Automation • Entire field force digitized for efficiency • Plans to expand distribution to 3 million outlets
Product Launch Criteria • Focus on substantive innovation with structured go-to-market plans
Gross Margins and Working Capital • Price hikes stabilizing gross margins • Increase in receivables and inventory attributed to strategic stockpiling and legal issues
Market Insights • Correction in reporting expected in half-year results • Glucon-D as the highest sales contributor • Need for further price hikes to recover margins, particularly for Complan • Significant market share gains in Everyuth brand, especially in scrubs and facial cleansing
Consumer Preferences and SKU Rationalization • Shift towards lower-priced packs noted • Lower unit packs (LUPs) partially compensating for demand decline
Conclusion • Management expressed confidence in improving gross margins as inflation decreases • Call concluded with thanks to participants and plans to reconvene next quarter.
Zydus Wellness Limited Q3 FY2023 Earnings Conference Call Summary
Overview • Date: February 2, 2023 • Hosted by: ICICI Securities • Key Management: Dr. Sharvil Patel (Chairman), Mr. Tarun Arora (CEO)
Financial Performance • Net Sales: Increased by 7.3% to Rs. 4,130 million • Total Income: Grew by 7.1% • EBITDA: Decreased by 12.7% to Rs. 282 million • Net Profit: Fell by 16.1% to Rs. 186 million • Operational Costs: Rising costs impacted profitability
Market Position • Glucon-D: 59.9% market share • Sugar Free: Over 95.8% market share in sweeteners • Facial Scrub Category: 41.8% market share (up 160 bps YoY) • Everyuth Peel-off: 78.4% market share (7% growth) • Nycil: 35.1% market share in prickly heat powder (13% growth)
Strategic Initiatives • Price Increase: Implemented a 6.5% increase to counter inflation • Supply Chain Preparedness: Adjusted for anticipated demand • International Revenue Target: Aiming for 100 Crores, currently 3% of total revenue
Management Insights • Gross Margin Recovery: Projected recovery of 270-300 basis points through price adjustments • Long-term EBITDA Margins: Targeting 20-22% in two years • Volume Growth: Year-to-date growth at 13.3%, with 6% from volume
Challenges and Outlook • Market Demand: Cautious optimism due to muted current market conditions • Complan Brand Strategy: Focus on gradual market share growth rather than aggressive expansion • Employee Expenses: Declined due to operational changes, with ongoing savings expected
Future Growth Plans • Revenue Target: 5000 Crores through double-digit growth across brands • E-commerce Focus: Dedicated team to enhance online sales • International Expansion: Exploring opportunities for Complan and Sugar Free products
Input Material Management • Pricing Trends: Successfully passed on price increases for key materials like Aspartame • Hedging Strategies: Focus on maintaining/improving margins
Conclusion • Management expressed confidence in achieving double-digit growth and enhancing profitability in upcoming quarters.