Thread by @WealthEnrich

🧵→ Mega thread on
the manufacturer of :
💫Sugarfree
💫Complan
💫Glucon-D
💫Nycil
💫Everyuth &
💫Nutrilite & much more.
It's Niche FMCG stock:
Zydus Wellness (ZWL) 💹
→ 🧵on 'WHY it can be a #portfolio stock for the long term !

💫→ Commands dominant market share in sugar substitute (96%), prickly heat powder (34.5%) & glucose powder (58.3%) categories !
💫→ ZWL has more than 1700 distributors with direct reach of > 5.5 lakh retail outlets & has a presence in more than 800 towns now & still expanding.

💫→ZWL has amazingly high gross margins at ~55% which gives it leeway to spend ~13% of sales on advertisement for new pdts (1 of the highest in industry) & has top Brand power
💫→ Despite various raw material issues, ZWL's profit growth is 24% & 23% & CAGR over last 3 & 5 yrs

💫→ ZWL has launched various (Sub-Niche) high potential products through brand extensions & variant launches like:
🎇Sugarfree D’lite dark chocolate
🎇Nutralite Choco spread
🎇Nutralite Dhoodh Shakti ghee & butter
🎇Glucon-D Immuno Fizz
🎇Complan Nutrigro &
🎇Nycil sanitisers

💫→ ZWL’s focus is on new innovations & it would reap rich dividends as its most recent launches such as Sugar Lite, Nutralite Mayonnaise & Choco Spread & Everyuth Tan Removal are contributing to the growth of the company.
💫→Management is extremely proactive in new launches.

💫→ZWL has reduced debt very sharply & is now almost debt free.
💫→ZWL has been on of the fastest growing company in the FMCG space with amazing sales growth inspite of various raw material inflation issues.
💫→ It has been maintaining a healthy dividend payout of 21.39%

💫→ ZWL has delivered good profit growth of 19.30% CAGR over last 5 years, despite immense competition by MNC's in this space.
💫→Going forward with new product launches, stronger distribution, strict cost controls, better OPM, ZWL would have a CAGR profit growth of 23-25%

💫→Top reasons for ZWL to outperform :
1. Consistent increase in brand recall
2. Synergistic benefits from integration of acquired Heinz India business (perk up in OPM by ~240 bps in the next 3 yrs)
3. Excellent Brand extensions
4. Timely & Aggressive Expansion in distribution

💫→ZWL has strong market share in smaller subcategories & being the leader, strong earnings growth is a given
💫→The large opportunity in health & nutrition space gives enough room for existing brands to grow to a sizable level.
💫→Brand domination of ZWL if par excellence.

💫→At CMP of ~ Rs. 1524/-, it is trading at a P/E of 32.2 (TTM EPS of Rs. 46.9/-)
💫→Profits is expected to grow at 23-25%+ for coming 4 years.
💫→ZWL is expected to nearly double its profits from 309 cr (FY22) to approx Rs. 590 cr in FY'26.

💫→ZWL MCap is Rs. 9,700 crore & with profits to grow at over ~25%, it is destined to be 20K+ crore Mcap in next to 4-5 yrs
💫→Last year ZWL did a CAPEX of ~70 crores & has also reduced debt
💫→With cool down in commodity prices & price hike taken, ZWL is on a strong footing