Ladies and gentlemen, good day and welcome to Zydus Wellness Limited Q1 FY26 results conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dhiraj Mistry. Thank you and over to you, sir.
Thank you and good evening all. First of all, I would like to thank the management of Zydus Wellness for giving this opportunity to us. From the management, we have with us Mr. Ganesh Nayak, Director, Mr. Tarun Arora, CEO and Full-time Director, and Mr. Umesh Parikh, CFO. Over to you, sir.
Good evening and welcome to the post-results teleconference of Zydus Wellness Limited for Q1 Financial Year 2025-26. I have with me, like Dhiraj mentioned, Mr. Ganesh Nayak, who is the Director on the Board, and Mr. Umesh Parikh, CFO, in the call. During the quarter, consumption trends highlighted a continued divergence across geographies. Rural markets sustained their growth leadership, outpacing urban areas, driven by strong performance in branded commodities, personal care, and dairy segments, while seasonal categories faced headwinds due to a shorter summer and unseasonal rains. The non-seasonal portfolio remains strong, cushioning overall performance. On the cost front, persistent input inflation is beginning to show signs of easing, providing optimism for margin recovery in the coming quarters. Meanwhile, the digital channels such as Quick Commerce and e-commerce continue to deliver strong growth.
Tier one and Tier three cities are emerging as key growth drivers, positioning the business well for its next phase of expansion. The company reported a consolidated net sales growth of 2.2%, amounting to INR 8,577 million for the quarter, navigating through the challenges posed by early monsoon conditions, which impacted seasonal brand performance. Encouragingly, excluding seasonal brands, the company delivered a strong double-digit growth, which includes the Max Protein business that is not in the base, hence reflecting the underlying strength of its portfolio and balanced business model. At the segment level, the personal care segment grew 3.8% year-on-year for the quarter, despite early monsoons impacting Nycil brands and dampening the demand in weather-sensitive categories. A healthy CAGR of 21.1% over Q1 of Financial Year 2022 underscores the portfolio's structural strength and long-term potential.
The food and nutrition segment recorded subdued year-on-year growth of 1.6% for the quarter, as softer seasonal demand significantly impacted Glucon-D. Ongoing portfolio diversification and contributions from acquired business helped mitigate the impact at the segment level. Importantly, the segment maintained a consistent CAGR of 7.3% over Q1 financial year 2022, reinforcing its relevant and sustained growth momentum. Organized trade saliency continued to improve, reaching 30.9% in Q1 financial year 2026, up from 23.3% in Q1 Financial Year 2025. Business e-commerce contributed 14.5% and non-trade 16.4%. Over the past two fiscal years, FY 2024 and FY 2025, we have delivered a cumulative gross margin expansion of 361 basis points, driven by proactive strategic hedging, a favorable product mix, and disciplined pricing action, despite the challenging inflationary backdrop that we had experienced. In the current quarter, however, gross margins registered a marginal decline of 73 basis points at an overall level.
Nonetheless, the majority of our brands continue to deliver strong gross margin expansion, underscoring the inherent strength of our portfolio. The saliency of seasonal brands was temporarily impacted by shorter than usual summers and unseasonal rains. On the EBITDA front, the company delivered a growth of 0.2%, reaching INR 1,556 million for the quarter. At the PAT level, the decline of 13.4% was primarily driven by non-cash items like amortization of intangible assets from acquired business and deferred tax impacts. During the quarter, the company returned to a net cash positive position, strengthening its ability to participate in large projects, infrastructure development, and automation initiatives aimed at building the business for the next phase of growth. With that, let me share some of the highlights of operations for the period gone by, which will also cover category growth and market share numbers as per MAT June 2025 report of Nielsen.
On the personal care front, Everyuth has consistently shown a consistent growth that is led by sustained double-digit performance, driven by innovation, product excellence, strong distribution, and customer-centric experiences. Our superior offerings and targeted marketing have successfully expanded the user base year after year. Everyuth leads key subsegments with a 48.7% share in scrubs, which is a positive of 262.3 basis points year-on-year, and 77.2% in peel-off masks, a drop of 56.4 basis points. Overall presence, the brand ranks fifth in facial cleansing with a 7.8% share, up 88.8 basis points year-on-year. Nycil saw a temporary dip this quarter due to early monsoons, but maintained its number one position with a market share of 33.3%. On the Glucon-D front, Glucon-D maintained its leadership in the glucose powder category with a market share of 58.9% at the MAT level.
The glucose powder category grew by 2.8% at the MAT level, however, the category declined for the quarter. Glucon-D Activors, the electrolyte energy drink, was rolled out across the broader national footprint, performing as expected under the revised distribution strategy, aligned with the weather-driven demand patterns. On the Complan front, the nutrition drink category has reported a decline of 2.6% at the MAT level, with the continued softness across key metrics. The brand currently holds a market share of 4.0% at the MAT level. On the sweetness front, Sugar Free brand continues to maintain its dominant position, holding a commanding 96.1% market share in the sugar substitute category, which has grown by 4.9% at the MAT level. Sugar Free Delight delivered encouraging results with deeper distribution and health-conscious packing trends driving the momentum.
The Sugar Free Green continued to outperform, reflecting strong consumer affinity for natural alternatives and sustained volume-led growth. Sugar Free continues to promote healthier living through ongoing campaigns, encouraging consumers to switch from regular sugar and cut calorie intake by half, supporting easier weight management and better daily choices. On the Nutralite front, we continue to broaden the portfolio through focused innovation year after year, growth momentum sustained by robust execution from focused B2B and B2C teams, enabling deeper market penetration and operational efficiency. On the RiteBite front, post the successful acquisition of Naturell India Private Limited in the later part of the previous year, the business continues to outperform the earlier estimates, reinforcing our strategic intent and portfolio expansion strategy.
The brand delivered robust growth during the quarter, with RiteBite Daily Bars leading the performance and further strengthening the brand's position in the high-growth, better-for-you snacking category. Our strategic priorities continue to focus on margin resilience, tech-enabled efficiencies, and sustainable growth through innovation and disciplined expansion. Thank you. We will now begin the Q&A session. Over to the coordinator.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tejas Shah from Avendus Spark. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, just the first, I wanted to start with the organic volume growth and value growth for the quarter would be.
Sorry, it is near to flattish. We don't give specific, but it's near to flattish. The incremental has largely come from, yeah, excluding seasonal brands, it is anywhere double-digit on its own as well.
Double-digit is volume or value? Volume as well or only value?
The ongoing business without the acquisition, without seasonal brands, is both volume and value. If I add the seasonal brands back for organic growth, it becomes flattish.
Okay. Okay, sir. The second, I was not able to reconcile two statements on your presentation. We are still saying that rural is doing better than urban, but when I see our organized trade saliency, it has actually gone from 23%- 30%. I'm assuming that will be largely urban indexed. Just wanted to understand where am I missing the point?
I think the point I made was initially at an overall level, what we see as a direction when we read the market and we look at the data from the secondary markets and our own read of the market that rural markets are performing. For us, actually, the significant movement this 23- 30 is driven by also amalgamation of this new business, which has substantial Quick Commerce e-commerce business, and therefore the share of that business has gone well as shot up. They're both right in that sense. Rural markets are better performing consistently. We see better traction in the general trade from our small pop strata, lower population towns, more than the top metros. Having said that, in the metros, the growth is largely driven by organized, the large towns are driven by organized trade, and that's, I think, a shift we all know about.
This number has shot up further because more than half our business of the acquired business is coming from e-commerce, and therefore the saliency shows. The third element driving this is also because both Glucon-D and Nycil seasonal brands have a highest share coming from rural, and therefore the mix also changes. There will be that element also which changes. One is data, the other is the overall market trend that is playing out.
Yeah, sir, just wanted to understand. I'm very clear, sir. Just wanted to understand, as we enter these low saliency quarters now, which are low impact on revenue and profitability, the seasonal pushback that we saw this quarter, does it carry forward into Q3, or it's done and dusted in this quarter and Q3 are kind of teams late from growth perspective?
It is done and dusted. There are some numbers which flow into July because especially Nutralite plays out here and a little bit of Glucon-D also. Post July, August, there is a very, very little impact. Some bit you might find in Q3, not significant. After that, there's limited impact.
Perfect. The last one, if I may, looking at the rough start that we had for the year because of this unseasonal rains, where do we kind of land upon our margin expansion guidance for a two-year view? I know that it is 18%, but what part of that guidance we can achieve this year as well?
I would look at what are the fundamental actions we need to take, and there is an external part to it. First of all, we need to drive through two or three actions which we have talked about. One is product-by-product gross margin expansion, which is a tick mark. Yes, we are product-by-product, SKU by SKU. We are focusing on gross margin expansion, some of which has already played out and will continue to play out. This quarter, the gross margin reported is lower, which is more of a product mix issue, but my actions are in place. In a normal year, you will find that giving the results that we intend to. The second key action that we believe that will help us improve our EBITDA margins will be as we scale up some of the operating leverages playing out.
That also, we are a quite cost-conscious company and our growth intent is playing out very well. Seasonal is, as we've mentioned earlier also, over a three to four-year period continues to be double-digit, and therefore the basic thesis of higher growth leading to operating leverage will also play out. A percentage here and there, but the two-year journey of enhancing my EBITDA I don't think we are moving away from that basic view. To my mind, you may find a quarter here and there, but directionally we think we have taken the right actions will play out.
Thanks. That's all from my side, and best wishes for the coming quarter.
Thank you.
Thank you. Before we take the next question, we would like to remind participants to press star and one to ask a question. The next question is from the line of Mayur Parkeria from Wealth Managers India Private Limited. Please go ahead.
Good evening. Can I audio able?
Sir, your voice is too low.
Hello. Good evening. Am I audible now?
Yes, sir.
Okay. First of all, congratulations to the management for delivering double-digit growth for the seasonal impact, and in an environment where consumption trends still remain relatively weaker overall, that's a great thing to look at. With that comment, just a small two questions from my side. One is actually you just partly mentioned that, but maybe to get more clarity. Irrespective of the seasonality and quarterly ups and downs, do we believe that in the last FY 2025 entirely we grew almost 15% or more than that? Do we believe that structurally over the next two years we are in a double-digit revenue growth cycle? One is at an overall industry level, especially for the products where we are, and at the company level more formally.
I can talk about company level. For sure, we believe that we are on that path. Over the next two to three years, we'll continue on a structural double-digit growth journey, and most of our products will be doing that. One or two products may have some challenges, which we've talked in the past, some category-led challenges, but largely most of our products will remain in that path.
Okay. We were on our journey to increase our advertisement and advertisement spend structurally over the last two years. On an annual basis, can you give us an understanding how where should we see this number stabilizing from FY 2025 levels in the next two to three years? Will the operating leverage also come from there, or are we still in the phase where as a percentage of sales this will continue to slightly move up?
In short to medium term, it will remain at a similar level as FY 2025 because we also want to invest back, increase gross margins into helping us increase our growth momentum, and it's essential for us. Over a longer term, yes, we will see more efficiencies coming through. Advertisement is just one of the things. There are several other fixed expenses which come from other expenses, the overheads, people expenses. There we do see that operating leverages will play out even better.
Right, right, right. Okay. Just to along with this, from a distribution setup, can you give us some qualitative numbers in terms of our direct reach? Where do we reach? In the light of Quick Commerce becoming more and more dominant from a growth incremental growth perspective, do we see, do we still believe and see that direct reach and the traditional channels reach will become critical for our growth as we go ahead?
Yeah. It's an interesting and a very important question because these are things that we have to think given the way market is reorganizing itself. From a very, very urban top city point of view, I think Quick Commerce is changing consumer habits significantly, and therefore we may or may not be necessarily driving our distribution expansion. At a national level, our current direct reach is direct coverage is about 6.1 lakh, 6.2 lakh outlets. We are available, as reported by Nielsen, by 2.8 million outlets. Our wish list is to expand that 2.8- 3.5 first and maybe eventually 4 million, assuming there's no major restructuring of the market that happens. Towards that, we are looking at expanding another 80,000 outlets in this financial year. We still believe there's enough room for expansion because we are building the categories.
Our job is to, being a market leader, to expand the categories, drive penetration. Therefore, we are still committed to drive our direct distribution and take it to hopefully by about 7 lakh by the end of this financial year. That's something we'll continue to do while building our capability both in e-commerce, Quick Commerce, as well as monetary. Organized trade continues to increase, but we continue to also invest in general trade because the smaller population towns, rural is still underserviced as far as organized trade is concerned. Therefore, this will continue to play a more important role.
That's great to hear. Can I squeeze in one more question, please?
Okay.
Thank you. Thank you for that. Actually, from the product side, can we get an understanding of where are we, what is our plan for the next 18 months in terms of new product, whether enhancements or changes? Because just like in automobile, we see there is the importance of new product launches and enhancements are also very critical, whether in small changes or big changes. In terms of number of products, if you can give some perspective, what are we planning over the next 18 months relative to FY 2025, what all we did? Thank you.
Sure. I understood your question. For FY 2025, we had 12 launches. I'll tell you, I don't have a specific number to share over the next 18 months, but I'll tell you two things that will drive our strategy or our choices. One is that consumers' expectations are changing at a much faster pace than most of us can handle. I heard some industry leaders from FMCG talk about smaller brands are no more, cannot be taken lightly. The fact is that new brands are coming in and disrupting the space. Keeping our brands relevant for the future is extremely important. We will be constantly working on upgrading our existing products. Which of them will cover for launch in 18 months, I cannot share. That is one fundamental we will do.
Plus, we have a few more products in our pipeline, in our innovation pipeline, which will follow through, some of which in the coming months. Since they are not in public space, I am not able to share, but we will continue to build it. Both NPDs and the relaunch of our existing portfolio is very high on our agenda to stay ahead of the curve and grow ahead of the industry.
Okay, thank you. I wish you all the best. I'll come in the queue if there is a focus. Thank you.
Thank you.
Thank you. The next question is from the line of Nikhil Upadhyay from Simpl. Please go ahead.
Yeah. Hi. Good evening. I think appreciation for the good results and the good performance the company has displayed this quarter. Sir, one question. As you mentioned that if we adjust for the summer heavy brands, we've grown double-digit. Can you talk about, can you rank which would be the brands which have grown fastest? Specifically zooming on Nutralite, because if we've seen a lot of product launches and product innovation we've done in the last one and a half years, how are those new product launches playing out now and what proportion of revenue of total Nutralite they would be today?
I could say that from a last year's base and a comparable base, I think three brands that stand out in terms of growth are our new acquisition Max Protein and Everyuth, followed by Nutralite. These three brands have had significant growth, driving our non-seasonal brand growth agenda and pulling the numbers up substantially. For your second question on Nutralite specifically, what is really driving our portfolio up? I think two or three things that are helping us. Our base business, our core, which is fat spread, continues to drive the momentum. That's essential for us to get right, and that continues to keep moving up. Having said this, the new part of the portfolio where we want to be are dairy and spreads, as well as our branded fat, if I were to say, butter and ghee branded ones, that has really helped us also move it up.
I think the most part of the portfolio is playing out. Our chocolate spread has not kept to the promise, but it's still very small. We've also not talked very big about it. Fat spread, value-added dairy, as well as mayonnaise, all have played out as per expectation ahead of our budgets. In fact, we've also launched cheese in the food service, early days, but early response looks good. We continue to move forward on Nutralite on a consistent basis.
Sorry to interrupt. The current participant got disconnected. We will move to the next question.
Maybe we can get him back. Yeah.
The next question is from the line of Kinjal Mota from Banyan Tree Advisors. Please go ahead.
Hi. Thank you for the opportunity. Sir, I wanted to understand what is your long-term view on the HFD category, the nutrition category, and how much does the South currently contribute to the business?
I think it's an interesting question. I think all players in HFD are grappling with this. Let me just put it like this. There are two or three parts which we need to keep in mind. First of all, HFD has stood long for nutrition. Now, nutrition is something which today's consumer is very concerned and tuned on to. Having said this, consumers' relevance, I mean, relevance of HFD as a single source of nutrition has died down, and people are seeking various other ways of getting nutrition. That's why this category has come under pressure. People have gone on to several other formats, products, new age brands, and traditional ways of getting nutrition, and that's really impacted this category. In my view, it will, in medium to long term, still deliver a certain sustainable low single-digit growth. I don't know. That's my view still.
There are good reasons for it. Only time will tell. We do believe that done right, by playing the right segments, there is still room for growth, and therefore we are still working on it. Some of our initiatives support that. That's why we've done slightly better than the category, largely because of trying to differentiate ourselves by offering some superior nutrition and consistently pushing ourselves into new ways of working. Having said this, I can't share the specific share of business as we don't, but overall, the category is about INR 7,000 crore on an MAT basis. Our market share is 4%. Though, of course, a large part of the category has also shifted to e-commerce, which is not reported. You could do your mathematics, but this is some of the direction that we could help you with.
Sure. We understand that you could not share the number of how much does South contribute currently, but any direction on whether the contribution from South region has declined over the years? If so, what are the reasons behind the same?
I won't say by South or North. I think Tamil Nadu in the South region is one of our key markets. That has stayed consistent for us. Overall, at the category level, it has come under pressure. For us, it has remained quite consistent by our action. In fact, we were more under pressure earlier years after acquisition, but we've done rather well in the last two to three years on sustaining that business.
Sure. That makes sense. Thank you. If I could pull out one bookkeeping question. In our financials, we report other marketing expenses, which are categorized as a part of other expenses. If I were to look at that number, it has grown significantly in the last five years. That is at 30% CAGR. I was just trying to understand that. How is it different from a normal A&P spend because it is categorized separately? If you could just help me understand this.
Are you pulling it out of the annual report? Is it? Because we don't.
Yes, yes. It's in the consolidated financials. If I were to look down into the other expenses head, there is a separate line item called other marketing expenses.
These are non-traditional expenses, things like doctor detailing and some CSD commission, which are kind of marketing but not real marketing advertising and marketing expenses, but impact our business support. Some of those things get captured in those. Some go-to-market expenses may happen. Some of those things get captured on this. Therefore, since we have increased our presence with doctor detailing for Sugar Free and Complan, some of those will look disproportionately high growth but may not be significant in absolute.
Thank you. I'm a [Khadil of Kinjal]. I just had one question if I can ask. Sir, we subsumed some pretty.
Sorry to interrupt. Can you please be more louder?
Yeah, sure. Am I audible now?
Yes.
Hello. Yeah, hi. Thank you. The question was, sir, we subsumed the Sumpriti brand into our Nutralite brand, and now we have also launched soap under Nutralite some time back. I just wanted to understand your thought process behind the brand extension, especially in segments which are not closely related to the core segment. These new segments are more complicated than your existing segments. How do you think about sending your brand there?
These are two different things. First of all, soap extension or Nycil is a very tactical one and only directed at the Middle East, which is more opportunistic. At a strategic level, most of our business is India-centric. We haven't done it, and therefore, there's no specific plan ready to share as far as the soap and Nycil is concerned. As far as converging Sumpriti brand into Nutralite is concerned, it was a very strategic call taken right at the time of acquisition. We had thought through it because we believe that Nutralite is a large brand. It has huge potential, and consumers don't see it as dairy or non-dairy, but it actually meets all our dairy and spreads requirement and can become one of our largest brands in the future if we run it right. Therefore, this convergence of Sumpriti into Nutralite has really helped the brand grow much bigger and much faster and also becomes more efficient from our investment perspective as well.
Got it. Got it. Nutralite, to a large extent, was a B2B brand. Do you think the consumers still retain or reconnect the Nutralite brand?
Our share from food service still remains much higher, but the retail leg to it is consistently expanding, and we continue to believe that both these parts, both food service as well as B2C, will continue to grow both and therefore make it a much larger brand.
Got it. Got it. Sure, thank you so much.
Thank you. The next question is from the line of Nikhil Upadhyay from SIMPL. Please go ahead.
Yeah, hi. Sorry, I got dropped off. My second question actually was, if you look at Max Protein and historical numbers, it was sustaining that 30%-35% kind of CAGR growth. Coming into our fold, have we been able to increase the rates, or how is the distribution acceptance of the brand, and is it sustaining that historical rate of growth?
I'll go back to what I talked about when we acquired the Max Protein business. RiteBite brand has historically grown more than 25%, and we had said that we envisage a 25%+ over the next four to five years. I'm happy to share that our actual, while we don't give specific brand-wise growth, but happy to share that the current momentum over six months of, actually, seven months of acquisition is much, much higher than what we had accounted for, and it is gaining substantial acceptance across all channels. We have also launched or are in the process of launching more products through this portfolio, and we believe that it has been strategically a good purchase for the business, and we see a long-term potential only enhancing ahead of what we had imagined at the time of acquisition.
Okay. I just have two questions. One is, have we been able to put Max Protein into the GT channel now, and how is the acceptance across the GT channel where we've played with?
Max Protein does very well in GT. We have a significant share in general trade. We have probably by far the largest brand in bars in this space.
Okay. Last question. This is a quarter when the summer portfolio used to always drive the margins. Even though, and I could be wrong here, by my calculation, it's like our summer portfolio is down at least 10%- 15%, but still the margins are sustained. Would you say that to a large extent, with the growth of the other brands, to some extent, our profitability is now immune to the summer portfolio performing? Like even if they don't perform, the company can sustain the profitability because historically, if the summer portfolio did not perform, the margins used to take a hit. Is it a good inference to make now?
I think it's taken a lot of effort by the team to ensure that we are able to manage and overcome the challenge of summer brands. I am not imagining a situation that we'll be immune to seasonal brands not performing. It does impact us because they are a very critical part of our portfolio. Over the last four years, like I mentioned, we have seen a good double-digit growth from both the brands, and they add to our operating leverage. They add to our gross margins disproportionately. It is very important. Yes, I think I would credit a great work by the Zydus Wellness team in managing a tough environment. The team has really come up to the challenge and handled it. Immune to seasonal impacts, not yet.
Sure. Thanks. I'll come back in the team.
Thank you. The next question is from the line of Ajay Thakur from Anand Rathi Securities. Please go ahead.
Hi, sir. Thanks for taking the question. I just wanted to check on the breakup between Everyuth and Nycil and how it would have panned out during the pandemic. It's more summer-centric. We would obviously have seen some decline. If you can just specify, if not quantitatively, but if more on a qualitative basis, the growth for Nycil and also if you can also highlight the growth for Everyuth in the same way.
I think while we do not, like you rightly also figured out, we do not share brand-specific numbers. This is one of the few exceptional quarters where we've struggled on Nycil because of the sustained monsoons. Otherwise, historically, even in difficult seasons, also Nycil does manage to do well. Obviously, that shows how deep and how long sustained the rainy season has been and impacted the overall seasonal impact. Having said this, Everyuth has had a phenomenal continued run that it has had, and we continue to be very excited about the opportunities that Everyuth has created for our growth. That's all I can share at this.
Okay. Would it be fair to say that Everyuth growth momentum, which was there, or the similar kind of a growth momentum that we had seen last year, is kind of maintained in going Q1? Would that be a fair statement?
Yeah, yeah. Momentum has continued. Absolutely.
Okay. You had alluded to cheese segment being entered in the food services domain. How big this segment would be and who would be the players over here? If you could just give some more details in terms of what kind of opportunity lies ahead, and can it be as big as maybe something like a margarine for us in the B2B?
We are early days into it. Look, our biggest part on food services is still fat spreads. We've got into mayonnaise. Cheese is early days. We've just done a few months of numbers. I cannot say, but yeah, potentially it could, I mean, it can because cheese is a segment that's so large, it could catch up with our margarine fat spread kind of business. That's a long way off. It's a lot of hard work for the team to work on. Yes, it's promising, and it also strengthens our Nutralite [Dairy] platform. The initial acceptance has been very good. We are quite positive about what we could build on as we speak. The other players, of course, are the regulars that you would know in the dairy segment or analog segment, which includes the likes of Amul, Parag, etc. They all have, all those players have their presence in this.
Understood. I also wanted to understand a bit more on the VieMAX. If you can share some light on how the Complan and VieMAX that you're doing post its launch, what kind of growth are we seeing in this launch over here, and how can we expect the momentum or what can be expected going forward from VieMAX?
Complan VieMAX is basically a drug nutrition space. Overall, the category is not growing super, but I think we've made our initial good impact. We've seen a lot of doctors. We've taken a hard route of following something which is not our inherent step, go to our expert route marketing, which is the healthcare professionals, the doctors supporting it. It's a strength that we are building and learning. We've seen some doctors really prescribing it, and that gives us confidence that our formulation is good. The doctors are happy with our proposition and recommending or prescribing it to their patients. That helps us believe that there is good potential in it. It's early days. It's still small, and it's a long haul. We believe we'll only strengthen the overall mother brand Complan as a superior nutrition space, spanning several segments from toddler to kids to adults now. We'll need to do more work, and probably in the next two to three quarters, we can share more updates as we move along when we have more sizable actions on this.
Understood. Go ahead, please. Thank you, sir.
Thank you. The next question is from the line of Yashowardhan Agarwal from IIFL Capital Services AMC. Please go ahead.
Hello. Am I audible?
Yes.
Hi. Yes. I'm sorry. I actually understand the opportunity. I had a couple of questions. First one is on the growth. If I look at the product categories, most of the categories.
You just repeat? Sorry. Sorry.
Yeah, yeah.
Can you restart?
Okay. Yeah. Sure, sir. My question is on the growth. If I looked at most of the products, the categories are still.
Sorry, your audio quality is not clear.
Yes, sir.
We are requesting you to use a headset.
Is it better now?
Hello. Is it better now?
Yes, sir. Please continue.
Okay. Most of the products that we are presenting, most of the categories are actually penetrated, and we are market leaders in it. I just wanted to know, will our growth be linked to the category growth, or won't it be? If not, what are the steps that we are taking so that we can assume that our growth would be better than the category, if not in line? That's the first question.
Hello? Okay. Can I answer, or do you want to ask your second question simultaneously in advance?
No, sir, you can answer this, and I will ask the question again.
Okay. First of all, I think if you really look at it, other than Complan, most of the brands that we have operate as market leaders in the space in their core categories, whether you look at Nutralite, Sugar Free, Everyuth Scrubs, Everyuth Peel Off, Glucon-D, Nycil. We have significant market shares in most of these categories. We see our role as driving the category. We are not driving market share. Market share, of course, is a byproduct. We are very happy to take higher market share. If I were to take an example, I would be very happy if glucose powder becomes an INR 1,100 crore category or INR 1,500 crore category rather than worry about whether my market share is 59% or 61%. If the category grows, I will grow. Therefore, as a market leader, our task is to grow those categories.
Having said that, and working the core on category development, which is through brand-led communication, building relevance, driving distribution, being available across omnichannels, the other opportunity is because our brands are so large and so strongly franchised with the consumers, where there's a very strong pull for that. We're also leveraging our brands into extensions where there's opportunity to grow much faster. There may be larger categories, and we may start as a challenger. For example, we just talked about Nutralite and mayonnaise or a cheese. For example, Everyuth getting into body lotion, Sugar Free extending into foods like chocolates and cookies. These are much larger categories. While my core job is to expand the categories and category development, I'm using extensions to play in larger categories and leverage our brand with a differentiation, which will help us drive growth.
That's the overall playbook of how Zydus Wellness will play across categories. Therefore, the innovation engine which works on improving and continuing our relevance in core and building our brand there, as well as getting into new spaces, is how this comes together. We believe that will be the way to success for our overall business as we move forward.
Got it, sir. The second question is only margins. We have added earlier as well that we are trying to improve our gross profit margins. Is it on the basis of expecting sharpness in raw material prices or change in SKU or probably launching a new product? What are the reasons for it?
I'm not going to rely only on new products to improve our gross margins. Some places we can, some places it's harder. New products will follow a certain minimum margin levels, but the core categories have to improve margins, which happens through multiple actions, which is price increases, calibrated price increases where there is opportunity and the consumers are willing to pay. More importantly, managing our cost side very well, managing our commodities right, taking future hedges, and whatever actions, contracting for a period of time, all set of actions. If the costs are not managed, then passing it on to the consumers because being market leaders, we have a reasonable pricing power. All these actions come together to drive product-by-product enhancement of gross margins.
Got it, sir. That's it from my side. Thank you and good luck.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the queue. The next question is from the line of Shrini Makarya from Finspot Analytics. Please go ahead.
Hello, sir. Actually, I wanted to ask about your products such as Complan VieMAX, Sugar Free, and Nutralite because do you think that they will benefit from GLP-1 trend also? Hello?
Ma'am, please wait for the management to answer.
Yes, there is a GLP-1 trend that we are aware of. I can't answer anything in specific because those things will play out in the marketplace. Obviously, there will be impacts of how GLP-1 plays out.
No, because your Complan VieMAX was prescribed by doctors, so there might be a chance that because for the GLP-1, nutrition has been prescribed by doctors. That is why I was asking that. Will there be any subsequent benefit to them also?
Our products are supportive of GLP-1, but we leave it to the doctors to understand and do the needful.
Okay. I have one more question regarding the taxation. For 2026 and 2027, you said that there will be zero tax. What will be the guidance for further years if you can tell us?
On this FY, which is 2025-2026, there won't be any tax. For next year, there could be some minimum, maybe marginal tax. Maybe you can set in about 8%-10%. Going forward in the next year, it will be at a full tax rate, which is at the rate of 25%.
Okay. Yes, thank you so much. That's all from my side.
Thank you. The next question is from the line of Harshit from Golicha Family Office. Please go ahead.
Hello. Am I audible, sir?
Yes, please continue.
Yes, sir. Very good evening. Sir, you have mentioned that in July, August, there will be a slight impact for the seasonal product. Despite this, on a like-to-like basis, are we confident of showing double-digit growth in the first half of this year, sir? This is my first question, sir.
We can't give you any specific quarter-by-quarter guidance. We've just given you a sense of what happened. You'll have to take the interpretations yourself for that.
Is it fair to assume the majority of the impact has already been absorbed in Q1? July, August is not going to be a majority for Glucon-D and Nutralite, sir, only for the seasonal part of the business, I'm asking, sir?
Correct. Correct. Most of it has been absorbed in quarter one, the impacts. July, August is a much smaller part of it.
Got it, sir. Thank you, sir. That was my only question, sir. Thank you.
Thank you. The next question is from the line of Ravi Purohit from Securities Investment Management Private Limited. Please go ahead.
Yeah. Hi. Thanks for taking my question. It's a couple of questions. One was, you know, we don't share brand-wise, you know, sales and numbers for our, you know, for the business, but we do provide a table in our presentations which give you the category size and the market share that we have in that category. Is it fair to assume that when I multiply the market share and the category size, I should get the broad sense of the revenues for those particular products? If I map those out over a period of time, that should give me like a trend of how the sales have progressed for those individual brands.
We don't share those brand-wise specific numbers. What we've put out there is what is available in the public space, which the syndicated data from Nielsen shows. It may be helpful for you from a directional point of view, but its adequacy is for you to judge because.
Would you take it? Would you rely on it?
It may vary from brand to brand based on the coverage or Nielsen, sub-brands covered or not covered. Therefore, you will have to put your own judgments to it. I know, but I'm just saying as an industry participant and as a contributor to various surveys, would you rely on those numbers or should we kind of avoid? Because it will, you know, you're putting it out in the presentation for us to see. If it is put by the company, then we should be able to make some sense out of it, right? That's what I'm trying to understand. If you could help me give some context whether the data is reliable, less reliable, partially reliable, not reliable at all, so at least we can use it from an analysis point of view, right? We can do it like a five-year trend numbers on those.
For example, Sugar Free says INR 370 crore category size, and our market share is 96%, which effectively means our sales for Sugar Free alone should be INR 350 crore, right? That's the place that I'm coming from. Like I explained to you, it is directional in nature. It cannot be precise because the coverage category by category is different. Also, with e-commerce, it does not cover e-commerce sales. Actually, Nielsen relies only on modern trade, part of modern trade and general trade, and they give their numbers. Therefore, these are directional. Our trust on Nielsen is not like we are believing, but it helps syndicated third-party data for you to assess us on that. That's why we put it out. We are not saying that you judge us only on that. We have real numbers which we are sharing with you.
Right. Fair, sir. The second question is, you know, when we acquired Heinz's business, and we merged into our own company, Heinz, when it was part of Heinz, was a full tax-paying business. When it came and folded into our company, that business became tax-free, so to speak, at least from the reported tax. The same thing will also happen with RiteBite once it kind of gets liquidated into our company. That will also have no tax liability, so to speak.
Not fully because the Heinz business, there was a very high amount of intangibles playing out. At that time, the depreciation of intangibles was allowed. Now, under the income tax, the depreciation of goodwill has gone. To the extent of the brand valuation, we get the tax share, but not fully.
Okay. There'll be some tax, but we will still be—is that the reason why we are kind of liquidating that company into this listed company, right? I'm assuming to get the tax share.
There are business reasons for liquidating a company, and you know, liquidation is a much faster route for integrating the business activity.
Okay. Okay. Sir, just one question on this Max Protein.
Sorry to interrupt, sir. May I request you to rejoin the queue, as there are several participants in the question queue?
Okay. Thank you. All the best.
Thank you. The next question is from the line of Pawan Kavari from 9M Wallace Securities. Please go ahead. Is the background noise from your line?
Is it clear?
Yes, please continue.
As I know, the company is not distributing the numbers for RiteBite, but if they can share for the acquired 25 numbers for RiteBite.
Sorry. We cannot share numbers for the acquired business like we mentioned.
You have the numbers at the time of acquisition, and we told you that the business has grown at the pace of 25% year- to- year. Currently, it has exceeded the projected sales that we have retained at the time of acquisition.
We can get the directional numbers on that, but we don't.
For 2025, we don't disclose. Because in 2025, we have for just one quarter. For overall year, what was the numbers for?
That's the number at the time of expiration. At the time of expiration for the last financial year, it was INR 130 crore.
Yeah, INR 130 crore for FY 2024. After that, after the acquisition, it's part of our business, and we follow the same system as for other brands. It will be not possible for us to say.
Okay. Does it continue the same growth in Q1 of this year?
It is, like we explained even in the earlier question, it is higher than what we had initially.
Okay. Thanks.
Thank you. The next question is from the line of Mayur Parkeria from Wealth Managers India Private Limited. Please go ahead.
Thank you, sir, for taking my questions again. Before I go to the questions, one, congratulations in terms of now participants have started asking you quarterly numbers. That's a change from some of the long-term questions and investors which we were seeing earlier. Now there's a lot of interest. Congratulations on that narrative. On the question side, sir, I had a specific question on Nutralite. We are bigger competitors in terms of one of the biggest competitors has been struggling significantly as far as the milk sourcing is concerned, as far as because of the dairy on the dairy side for quite some time. What is our sourcing strategy from that perspective, given that now we have launched cheese and other dairy products which we are looking at? What is our sourcing strategy on the milk? That is first. Secondly, I'll again on the Nutralite, but I'll ask after your responses.
For Nutralite, there are two parts which play out. One is, of course, the traditional fat spread margarine and then mayonnaise business, which is an oil-based product where we continue to work with large oil suppliers. We have a good working relationship with them from a sourcing strategy, and we do publish directional rates, which follows a global lead chart. Talking about dairy, we are largely focused on Western UP dairy sourcing, which is based out of our Aligarh plant, which has a history dating back to 1959 when it was started. We have our own network of societies and farmers who provide milk. Therefore, we've been fairly consistent with them. We've worked and grown with them. We believe that we have sufficient support from that space. That is what we'll restrict ourselves to. We are not a big dairy player. We want to be restricted to this space.
Whatever our internal plans, we don't see sourcing issues coming in our way for the next few years at least. That's the right way to look at it?
Yes. We don't see sourcing issues. We do see pricing issues, which come with any commoditized product. That's it.
All right. Second, on the Nutralite itself is, again, mainly from the reason is, you know, normally when there is an elephant in the room like Amul, which is there on that side, it becomes very difficult to create a right-to-win strategy, especially when they are so agile and so successful across the categories. What is our thought process in that side and from that perspective? One is one was from sourcing, the other is from the marketing side and the product side. When you know there's a player and there are multiple, there's others also, but you know it's a large one. What is our overall strategy to right to win over the next three years, you know [Kathy] can lay out?
Let me put it three or four things very quickly. One, I think the market is very large, and therefore, one large player doesn't perturb us. Secondly, Nutralite has stood for a healthier alternative to the core. Each of our products clearly differentiates on some differentiated offering, like recent launches, the butter we've launched with the probiotic butter, where there is a probiotic added. In mayonnaise, we've added some vitamin fortification. We're quite focused that we provide high-quality products formulated with health in mind, a strong marketing and sales capability. There is room for multiple players that should take care of us.
Okay. Thank you so much. Wish you well.
Thank you. The next question is from the line of Jeremyn from Arcedo Asset Management. Please go ahead.
Congratulations, Tarun, on a strong setup and execution in a challenging external environment. I just have one question. Could you elaborate on teams, size, or strategic side I may say that emerged from the consultancy engagement specifically concerning the HFD category when Complan continues to underperform, like 6% market share from application days to currently 4%? On that follow-up, I mean, how do you look at the opportunity cost in terms of the management bandwidth as well as the innovation capital? At which point of time would you like to draw a line and dramatically alter the strategy? At worst, I mean, get an exit from this category and double down on categories where you are clear to win and expand those categories?
I think there are two or three ways to look at it. Our market share has moved from 5.5 from June 2019 when we acquired the numbers to June 2025 if we were to look at it. It's about a percentage point reported by Nielsen. Our own read is because Nielsen doesn't cover e-commerce where we have slightly higher than Nielsen reported shares. Our real blended share is better than what we report publicly because it's not public data. I cannot share it with you. Having said that, I think it's largely got to do with the category challenge. We believe that there is opportunity still in the nutrition space.
How do we find relevance for our brand in the new world where there is a struggle for the HFD category, but Complan can still thrive by charging a premium, by offering superior products, and launching products relevant for the consumers? For the new age consumer, it will be the only way to do it. If that works and it plays out, I think we should be sorted. If it doesn't, then we'll have to do some strategic call at some point of time in the next couple of years.
Thank you so much. Thank you.
you. Ladies and gentlemen, this was the last question. I now hand the conference over to the management for the closing comments. Thank you and over to you, sir.
Thank you, everyone, for the interest shown and asking us some insightful questions on Zydus Wellness. I hope you have good health and a good season ahead. Thank you very much, and we will reconnect after the results of next quarter. Thank you.
Thank you. On behalf of Zydus Wellness Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.