With above data, ROE is reduced substantially due to increase in assets, which is due to Heinz India acquasition.
Can anyone shed light on how they are going to improve the Asset Turns? Or is it going to be in this same range? Any guidance from management?
In general what strategy company uses to improve asset turns when it acquires another company?
Results announced, ~6% revenue growth, PAT flat for Q4 YOY. Gross margin improvement of 264 basis points as per presentation, reduction of debt. Reduced APTID spends to partly compensate for higher COGs than last year.
This report was an excellent read, thanks for sharing. There were some points on Zydus which were never clear from prior investor presentations, and this report does an excellent job on bringing this out.
With complete credit to the original author, I would like to bring out an analysis on Page 8 of the report which helped me understand this company a lot better:-
Solid diversification between product categories now - though the acquisition Zydus has moved from a company very dependant on Sugar Free to a very healthy mix across high growth categories - Complan now contributes 21% of revenues, Glucon D is 26% and Nycil + Everyuth + Nutralite make another 27%
The business now has a strong level of seasonality involved with Complan, Nycil and Glucon D having a high percentage of revenues on the summer season
All categories still have scope for distribution expansion within the current network - be in the Heinz range in Zydus strong pharmacy distribution or the Zydus products in Heinz acquired General Trade network
why is this stock languishing, they have more than few iconic brands? - agree with you, I am having a small position in this stock and planning to buy more if it dips further, like you feel this stock is indeed not performing as per what it holds. Market Cap/Sales its almost at covid levels - when they are having pricing power and monopoly products like Sugar Free. There was some small insider buying in september, lets see if further there is any insider buying - as that gives a bit of confidence to us minority shareholders.
Will you pick up this over Zydus life which owns it and what would be the rationale? We have many such situations where 2 companies are listed and one has majority stake in other…so whats the decision making process when you invest in one over the other? - Generally holding companies do well at fag end of bull market, when its time to switch to cash. Also, Zydus Life has US pharma exposure which is more uncertain and for me more complex to understand than selling Sugar Free, Nycil and Glucon D.
Actually, Zydus Life did a buyback when that stock was in the doldrums, if Zydus Wellness can do the same (considering same promoters), it will bring some upward trajectory to the stock.
Currently it is not paying tax, as per my understanding over the course of next 2 years they will exit from SEZ and be liable for full 25% corporate tax. I have not fully studied this but this is the reason I decided to hold back on my investment.