Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

Equity Bottom-Up

<p>We recently attended the extraordinary general meeting (EGM) of <a href="https://www.smartkarma.com/entities/4353" target="_blank" data-smartkarma-citation="entities:4353:1">Zydus Wellness (ZYWL IN)</a>. The primary agenda for the EGM was to approve the issue of fresh equity and raise debt to finance the acquisition of <a href="https://www.smartkarma.com/entities/2253" target="_blank" data-smartkarma-citation="entities:2253:1">Kraft Heinz Co (KHC US)</a> 's Indian subsidiary Heinz India Private Limited jointly with <a href="https://www.smartkarma.com/entities/12914" target="_blank" data-smartkarma-citation="entities:12914:1">Cadila Healthcare (CDH IN)</a>. This will include the brands Complan (Health Food Drink), Glucon D (Glucose Powder), Nycil (Talcum Power) and Sampriti Ghee. We believe the deal is in sync with management's vision of developing Pharma oriented consumer brands. However with recent acquisition of <a href="https://www.smartkarma.com/entities/18984" target="_blank" data-smartkarma-citation="entities:18984:1">Glaxosmithkline Consumer Healthcare (SKB IN)</a> by  <a href="https://www.smartkarma.com/entities/13828" target="_blank" data-smartkarma-citation="entities:13828:1">Hindustan Unilever (HUVR IN)</a> the competition in the health food drink market may get intense. Having said that, the largest brand Glucon D will likely continue market leadership along with Everyuth and Nycil which will be a good addition to the Zydus Portfolio. Any attempt for market share gains with Complan and Sampriti ghee will be futile and may come at a cost of margins. Based on preliminary, we expect full effect of the deal to appear on FY 2020 financials. Our preliminary estimates indicate a FY 2021 EPS of 51.68, which with a average PE multiple of 34.56 leads to a price target of INR 1809 per share implying an upside of 35% from latest close price of INR 1342. We will revisit our estimates post Q4 FY19 numbers when a much clearer picture is likely to emerge. </p>

We recently attended the extraordinary general meeting (EGM) of Zydus Wellness (ZYWL IN). The primary agenda for the EGM was to approve the issue of fresh equity and raise debt to finance the acquisition of Kraft Heinz Co (KHC US) 's Indian subsidiary Heinz India Private Limited jointly with Cadila Healthcare (CDH IN). This will include the brands Complan (Health Food Drink), Glucon D (Glucose Powder), Nycil (Talcum Power) and Sampriti Ghee. We believe the deal is in sync with management's vision of developing Pharma oriented consumer brands. However with recent acquisition of Glaxosmithkline Consumer Healthcare (SKB IN) by  Hindustan Unilever (HUVR IN) the competition in the health food drink market may get intense. Having said that, the largest brand Glucon D will likely continue market leadership along with Everyuth and Nycil which will be a good addition to the Zydus Portfolio. Any attempt for market share gains with Complan and Sampriti ghee will be futile and may come at a cost of margins. Based on preliminary, we expect full effect of the deal to appear on FY 2020 financials. Our preliminary estimates indicate a FY 2021 EPS of 51.68, which with a average PE multiple of 34.56 leads to a price target of INR 1809 per share implying an upside of 35% from latest close price of INR 1342. We will revisit our estimates post Q4 FY19 numbers when a much clearer picture is likely to emerge. 

EGM Diaries | Zydus Wellness (ZYWL IN) | A Boost of Instant Energy

India

Zydus Wellness Ltd. processes dairy products.  The Company produces margarine, butter, and cheese.

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EGM Diaries | Zydus Wellness (ZYWL IN) | A Boost of Instant Energy

We recently attended the extraordinary general meeting (EGM) of Zydus Wellness (ZYWL IN). The primary agenda for the EGM was to approve the issue...

Pranav Bhavsar