Zydus Wellness Ltd. (ZYWL), a subsidiary of Cadila Healthcare Ltd. is into manufacturing and marketing of niche
wellness products, having plants at Ahmadabad and Sikkim. It offers wellness products, combines best of healthcare,
nutrition and cosmeceuticals. All its products, viz., Sugar free, Nutralite, EverYuth and Actilife; cater to the evolving
needs brought about by change in lifestyle and surge in chronic diseases. Being an early entrant, with launch of
Sugar Free in 1988, it has successfully gained over 90% of the market share of an artificial sweetener.
Over half of its revenues have been contributed by Sugar Free and EverYuth, we expect these two products continue
to drive the revenues and Nutralite to provide some support to the overall margins as vegetable oil prices are cooling off. Between FY08 and FY13, ZYWL's revenue and net profit have
grown at a CAGR of 48% and 84%, respectively, due to its play on
the rising affluence in the country, increasing conscious about their
calories intake and rising number of diabetic patients. We expect to
mirror relatively similar growth, going ahead. We initiate coverage with
a target price of Rs.726 and BUY rating.
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wellness products, having plants at Ahmadabad and Sikkim. It offers wellness products, combines best of healthcare,
nutrition and cosmeceuticals. All its products, viz., Sugar free, Nutralite, EverYuth and Actilife; cater to the evolving
needs brought about by change in lifestyle and surge in chronic diseases. Being an early entrant, with launch of
Sugar Free in 1988, it has successfully gained over 90% of the market share of an artificial sweetener.
Over half of its revenues have been contributed by Sugar Free and EverYuth, we expect these two products continue
to drive the revenues and Nutralite to provide some support to the overall margins as vegetable oil prices are cooling off. Between FY08 and FY13, ZYWL's revenue and net profit have
grown at a CAGR of 48% and 84%, respectively, due to its play on
the rising affluence in the country, increasing conscious about their
calories intake and rising number of diabetic patients. We expect to
mirror relatively similar growth, going ahead. We initiate coverage with
a target price of Rs.726 and BUY rating.
Leader in an artificial sweetener - Sugar Free to sweeten
overall business
Over the years, Sugar Free brand has successfully captured 92% of
the total market share of an artificial sweetener market. If we lightup
the history, it was firstly launched in 1988 as an ethical drug and
promoted through doctors for diabetic patients. In 1993 it was
promoted as an OTC product.
Sugar Free product has very strong brand equity and it is always on
the top of the buyers' mind when it comes to the sugar substitute.
With launch of Sugar Free in 1988, it had made people aware about
an artificial sweetener and created the demand for the product, in a
way industry has been created and developed by the Zydus Wellness,
in India.
As on 31st December 2012, ZYWL is a market leader with more than
90% of the total market share. Of late, many MNCs and domestic
companies have jumped in, to eat the fruits sown by the ZYWL, this
has led to single digit growth in the last 3 quarters. To remain
competitive, it has rolled out an aggressive ad campaign, roped in
many big celebrities and extended its Sugar Free brand, viz., Sugar
Free Gold (Aspartame based), Sugar Free Natrura (Sucralose based),
Sugar Free Herbvia (Stevia based) and Sugar Free D'lite (Drink).
These extensions are available in different forms such as pallets, powder,
sachet, sweet drops, ready to drink and powder drink. Sugar Free Gold is
the highest selling product followed by Sugar Free Nutra and margins are
also superior as compared to other extensions, due to lower input cost i.e.
Aspartame.
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