Hi. It's an absolute pleasure from ICICI Securities to host the Q1 FY '27 earnings call for Zydus Wellness.

From the management, we have Mr. Ganesh Nayak, Non-Executive Director; Mr.

Tarun Arora, CEO; and Mr. Umesh Parikh, CFO.

I now hand over the call to management for further remarks. Thank you, and over to you, sir.

Thank you. Good evening, and welcome to the post results teleconference of Zydus Wellness Limited for quarter 1, financial year 2026-27.

I have with me Mr. Ganesh Nayak, Director, and Mr.

Umesh Parikh, CFO, on the call from our side. During the quarter, consumer demand remained resilient with spending increasingly shifting towards higher-value products.

The premiumization trend continued to strengthen as consumers traded up in categories such as personal care, beauty, and packaged foods, supporting value-led growth. Quick commerce and e-commerce remained the primary growth engines, sustaining strong double-digit growth and continuing to gain share across categories.

However, seasonal demand was impacted by frequent summer showers across eastern region and parts of North India in otherwise highly salient geographies, which disrupted the usual summer consumption pattern and softened demand for weather-sensitive brands, particularly Nycil. On the cost front, input trends remained largely manageable despite divergent movements in commodity prices and currency.

Company effectively navigated these pressures through disciplined pricing strategy, an improved product mix, and a continued focus on premium offerings. While ongoing geopolitical disruptions continued to create uncertainty, their impact on the company has remained limited due to proactive mitigation measures.

Innovation continues to be a key driver of our portfolio growth. During the quarter, we continued to leverage our strong R&D capabilities to expand into new demand spaces, address evolving consumer preferences, and strengthen the relevance of our categories through a steady pipeline of differentiated offerings.

We strengthened our portfolio with targeted innovations, namely Complan Power Play Milkshake, which extends the Complan franchise into ready-to-drink nutrition beverage segment for active kids, combining great taste with essential nutrition and is available in vanilla and chocolate flavors with no added sugar and no preservatives; V-Max Diabetes Care, a scientifically formulated nutrition solution designed to support diabetes management through a low glycemic index and a high-protein, high-fiber formulation that helps manage blood sugar, promote satiety, support strength, and enhances gut wellness. In addition, Comfort Click business continued to expand its portfolio through multiple product launches and range extensions across key categories.

Together, these initiatives reflect our continued focus on premium science-led innovation and our commitment to addressing evolving consumer health and wellness needs. On the financial front, for quarter 1, financial year 2027, the company reported consolidated net sales of ₹14,299 million, reflecting a growth of 66.7% year-on-year.

Our international business, including the Comfort Click business, delivered a like-to-like growth of 24.8%, while the domestic business grew by 4.6%. Within the domestic portfolio, skin and hair care and food and nutrition continued their strong momentum, delivering growth of 34.5% and 16%, respectively.

Seasonal brands, however, declined by 12%, primarily due to softer summer season. Excluding the summer portfolio, all our key brands continued the momentum, and cumulatively delivered strong double-digit growth in line with our expectations.

With the business becoming less dependent on the summer season, our diversified portfolio continues to support more balanced growth throughout the year. In Q1 FY '27, our organized channel saliency reached an industry-leading 38%, with modern trade contributing 17% and digital commerce about 21%.

Gross margin expansion in the core business remained strong during the quarter and was further supported by significantly higher margin of the Comfort Click business. On the EBITDA front, company reported a growth of 55.3% for the quarter, reaching to ₹2,417 million.

Robust improvement in EBITDA percentage of core business as well as Comfort Click business leading to overall EBITDA percentage expansion by approximately 0.4% on a like-to-like basis. Net profit declined by 7% during the quarter.

However, net profit excluding amortization of acquired brands registered a growth of 26.5% for the quarter. Comfort Click business continued to be EPS accretive.

Brand performance and market share developments are detailed in the investor presentation. Key highlights include: Complan surpassed the growth posted in the previous quarter despite category degrowth; Everyuth delivered strong double-digit growth with the tan removal franchise continuing to outperform internal expectations; digital-first consumer engagement expanded the brand's user base while sustained momentum improved its ranking in the overall facial cleansing category from fifth to fourth rank; Glucon-D registered a double-digit growth in West and South and moderate growth in North were offset by weakness in the East, a highly salient market, due to frequent showers resulting in flattish performance; Nycil's performance was significantly impacted due to unseasonal rainfall in the North and East key saliency markets, which double-digit growth in West and South along with cautious channel stocking and slower offtake driven by higher retailer inventory of the last year; Nutralite delivered strong growth supported by portfolio strength, innovation, high consumer engagement, and a high double-digit 6-year CAGR; RiteBite Max Protein continued its strong growth trajectory, reinforcing leadership in protein snacking through innovation, expanded distribution, and execution excellence, driving robust value, volume, and margin growth—quick commerce remained a key growth driver through continued distribution expansion; Cuticura witnessed strong demand traction [ahead of?]

internal expectations with positive consumer feedback across organized retail channels; within the sweetener portfolio, Sugar Free maintained category leadership, delivering double-digit growth in the core portfolio and significantly outperforming category trends; Sugar Free D'lite continued its strong momentum, delivering its high double-digit growth; I'm Lite further strengthened its healthier living proposition, delivering higher double-digit growth on a year-on-year basis; with the Comfort Click business, we strengthened our international presence by launching the WeightWorld D2C platform in the US, expanding into the Walmart marketplace, and accelerating Middle East growth through launches of WeightWorld and MaxMedix on Noon UAE, alongside establishing a physical UAE base. Our long-term growth strategy remains anchored in building a future-ready premium portfolio through disciplined execution and technology-enabled decision-making.

By leveraging technology and analytics across innovation, consumer engagement, brand investments, and execution, we are anticipating evolving consumer needs, strengthening organizational agility, enhancing investment effectiveness, and building a resilient platform for sustainable profitable growth. Thank you.

We will now begin the Q&A session. Over to the coordinator.

Hi. I hope I'm audible?

Yeah. Sure, sure.

Thanks for the opportunity. Just firstly on the international business, sir, we've broadly reported approximately 25% YoY like-for-like growth.

Just to understand, was this quarter in any way constrained by stock availability or supply chain disruptions?

No, there were no specific constraints for us. 25% is a good growth.

We've been talking about our double-digit growth.

That should be the growth rate broadly that we should be working with for the upcoming quarter and this should be the new sustainable growth rate?

We normally don't give a forward-looking. We've just said double digit, so that's what it will contain.

Fair. Thanks, sir.

I'll get back in the queue.

Hello, good afternoon, sir. Am I audible?

Hello?

Yeah. Hi, sir.

I just wanted to get an outlook on the effective tax rate across FY '27 and FY '28.

As probably would have noticed that the current effective tax for this quarter, Q1, is close to 27%. That's largely because of the disallowance of some of the items because of thin-cap rule in the UK.

Otherwise, it would be in the range of 25%. However, having said that, out of 25%, 12% to 15% would be a cash component this financial year.

From next year, we probably would be in the 25% tax rate entirely in cash. Oh,

for FY '27, we can get 25% tax rate, effective tax rate?

That includes the deferred tax, but the cash component would be lower, maybe half of 25% or a little more than half.

Sir. Thank you.

I have another question. If we see that interest rate during the quarter has been reduced versus quarter-on-quarter, may I have the reason behind reduction of interest rate?

We have actually transitioned from the GBP loan to euro loan at a much reduced interest rate. Therefore, that gave us saving in the interest cost.

Going forward, I think it should hover around this, subject to the benchmark rate which is declared in euro.

For the upcoming quarter, is it the effective finance cost going to be the same like the one that we saw in—

Unless there is a too much of variability in the base rate in euro currency. Otherwise, if it remains the same or around the same, the effective interest would be around the same amount.

Sir. Can I squeeze in one last question?

Sure.

Can you please provide an outlook on Nycil revenue for this quarter as well as for the year FY '27?

Nycil has had a difficult last quarter largely because— Max Protein.

Sorry to interrupt, but I'm asking about Max Protein, not Nycil.

RiteBite Max Protein business. That's been growing at more than double the historical growth rate, as we've reported earlier as well.

We continue to see a very strong momentum led by three actions. One is brand building, where we are expanding our investments on brand building—you would have probably seen it on FIFA World Cup and various other places.

Second is distribution expansion, and the third is enhancing our portfolio. We are expecting it to maintain its growth momentum.

Okay. Thank you, sir, and all the best for the future quarters.

Hi. Am I audible, sir?

Hello? Yes.

Yes, you are audible.

Hi, sir. Thank you for taking my question.

Just had one question with respect to the summer portfolio. Our understanding was that the monsoons this time were quite delayed all across India, and our saliency was higher in West and North.

In that context, just wanted to understand if you could help us understand this 12% decline in terms of the geographical markets? Sure.

Let me break it down, and I think if you would have heard, we've we've had a flat flattish growth in Glucon-D and bigger impact has come in on Nycil. Now as far as Glucon-D is concerned, it's largely the impact of East, which is North and East are the most significant part of our portfolio, the highest salient, where East has actually impacted us.

Therefore, while North has and West and South have seen a positive momentum, but that all that gain has been nullified by East, where there were continued rains, especially in April and May. If I look at Nycil, there I think there are two or three parts.

There again, North and East have been the biggest challenges because West and South have seen good growth. North and East are some of the most salient geographies for Nycil as well.

There, that is also compounded by the fact that it's a there has been a suctioned retail stocks with in the consumer stocks. Therefore, the offtakes have been a little bit not a little bit, is being challenged.

Towards the end of the quarter, we've seen, actually, it was more towards the first half of the quarter. The second half of the quarter, we have seen a good recovery in growth rates for both these brands, but not enough to recover to, recover the full growth for the quarter.

As we speak, we are seeing growth momentum coming back, and we should end up on a more positive note for the remaining part of the financial year, hopefully.

Understood. Understood.

How does the launch pipeline look like this year?

We've had a series of launches, if you look at in last three to four quarters across the portfolio, whether it's Complan, Sugar Free, Max Protein, Glucon-D, we've had and even Nutralite, we've had series of launches. We have couple of more launches in the coming quarters, but I think our focus is the launches that we've done, the NPDs we've done, how to scale them up.

We're quite excited with the possibilities because some of them have shown very good response from consumers and trade, we hope to build them further. Our long-term pipeline is looking fairly robust for next two to three years.

Understood. Understood.

This last question, this expansion that we are doing in Comfort Click in US and Middle East, the services and support team continues to be in India, right? We'll not be expanding those in the new countries that we set up.

Support team continues to be in India. Yeah.

All right.

All right. Thank you so much.

Good afternoon to the entire team. I think given the challenges which you faced for Nycil, I think it was still a decent quarter which we go through.

While there is clearly expectation which was now for investors was higher, but there's an industry situation. Given that, a great execution.

I had two questions on Comfort Click itself. First is because of the fact of Comfort Click now getting consolidated, but we have seasonality not in our favor for September and December quarters as we go ahead.

Now we have high fixed cost into our P&L in terms of interest and depreciation cost of close to ₹80, ₹85 crores. I just want to understand that is it possible that we will report positive EBITDA as we go ahead despite this high cost structure in the September and December quarters because of the seasonality products not being there?

That is a very positive outlook.

As we have mentioned earlier also that Comfort Click has become EPS accretive from quarter 4 of the last financial year and continue to do so. If the same momentum continues, which we expect, I think will register increase in the net margin as well as EBITDA as well as profit before tax.

Okay.

Okay. That's a great confidence, I think.

It will also be positive. Since the rain impacts are behind us, I think, and we are seeing some recovery in the domestic side, this will help us.

Will that be a correct understanding overall?

Yes. Yes.

Okay.

The second question is on the Comfort Click I had was, there is a lot of narrative now because of the GLP-1 adoption across the globe and the importance of our portfolio in terms of this diabetes management and the various vitamins and the package which is required from that perspective. I wanted two understanding of that.

Is any of our products will require a doctor's prescription or a prescriptive situation, or is it consumed completely on a OTC basis by the consumers? How is it abroad, firstly?

Secondly, how are you seeing the early signs in the US entry, and can that be a big needle mover for Comfort Click as we go ahead in the next two years? Yeah.

You've asked two or three parts to this question. Comfort Click portfolio is digital-only business largely, and there is no doctor prescription involved.

All the products are OTC by nature and therefore don't need any prescriptions. We do not envisage any change to this structurally.

Therefore, any demand which arises out of GLP-1 or any other trends, we'll remain from a servicing these requirements from a D2C perspective. That should take care of the whole thing.

Did you have any other part to it?

The the US the US part, how do you how you see early signs of, entry and what how do you, over the next two years? Do you think it will be a meaningful driver for Comfort Click as we go ahead?

Too early to predict, but right now very, very small, but growing well. We are positive and we are building on it.

Time will tell where it shapes up, but it's a very small portion of our business right now, but growing well, in line with our expectations.

Okay. Okay.

Thank you. I'll come back in the queue for more questions.

Thanks for the opportunity. Sir, my first question is regarding the seasonal portfolio.

Now the major part of that, two brands have been called out. Can we see a further channel-related disruption in terms of higher inventory in the next hike or the next season?

Not really, because if you really look at it, very hard to predict because we have a visibility on what is the stock in our system and with our distributors. We can't predict beyond a point.

Whatever I have seen of it, I think let's look at it. Our own inventory is not more than what it was last year, probably a bit lower.

Secondly, the shelf life of the products is three years. Sometimes in a bad season, it can prolong the usage, and consumers typically buy 1 to 1.5 pack in a season.

That's the history of this whole thing. I don't see this really rolling over to a next year issue.

There's already a good sign of a positive growth on a low base already in last couple of months. I'm quite positive about how this will shape up over the coming quarters, but finally the numbers will have to play out.

Understood. Secondly, from our RiteBite Max Protein portfolio, wherein we are seeing very strong traction both in terms of top line and profitability, how the progress we are seeing in terms of the offline expansion, especially into the newer T2, T3 regions, wherein we are seeing very good early sign of visibility based on our initial checks?

We are seeing very good traction. Our distribution, and I mentioned in an earlier question, three drivers of growth where brand portfolio and distribution.

We are going deeper and wider. In offline specifically, we've committed resources in terms of distribution expansion, and that's really working for us.

We will continue, but we are selective about it because these are high-value products, and still it is top towns which contribute to a significant throughput. We'll continue to drive it deeper and wider.

Rural is too far, but next two class of towns, I think we're already seeing a good traction.

Okay. Lastly on the Comfort Click part.

When we are seeing very strong double-digit growth over there, based on our understanding, UK is one of the larger part and balance of the EU market is the larger secondary pie. How the growth rates are segregated between these two geographies?

We don't segregate UK and rest of Europe. I would say Europe has five key markets, namely UK, France, Italy, Germany, and Spain, which constitute the bulk of our business.

I think overall growth rate is captured here. I would want to avoid sharing those things.

We don't go there.

No issues, my end. That's it from my side.

Thank you.

Hi, team. My question is on Complan.

From past two quarters, we have been reporting good growth in the Complan segment. Despite the category degrowing, what has fundamentally changed from the recent past that is helping us to grow in this category?

That is question number one.

I think our approach has been fairly consistent as far as Complan is concerned. We have looked at breaking down the whole Complan into three or four segments.

First is the core kids segment, which has been most under pressure. Our constant endeavor to offer superior nutrition supported by high-quality advertising and investments and distribution expansion has helped us focus and get growth back on this.

We've also got celebrity Vaibhav Suryavanshi, who's been a Complan Boy now for a couple of quarters. Plus, if I look at it, we are also participating in specialized nutrition spaces with toddler space for Complan NutriGro and adult nutrition through V-Max and V-Max Diabetes now, which we launched last quarter.

We've actually entered a new space, which is new for the brand, which is the RTD, where Complan Power Play is coming in. We believe through multiple formats and propositions, the Complan overall brand is seeing a good acceptance from consumers, and the whole brand-building initiative, portfolio expansion, and distribution pieces coming together in the way we had envisaged.

We're hopeful that this momentum will continue. There is headwinds thanks to what the category faces, but we've been able to navigate now for two, three quarters.

We hope to continue that momentum.

Loud and clear, sir. One more thing on the same part.

The additional growth that we have been reporting, is it coming more from the kids nutrition portfolio or the adult nutrition portfolio?

It's coming across, but kids nutrition is the core of the business, a substantial part of the business, so that is certainly contributing to it. That's the driver of it.

Okay. Thank you, sir.

Super helpful.

Am I audible? Hello?

Yes.

Thank you for the opportunity. My question is around our protein portfolio.

How do you see the revenue mix evolving within protein portfolio over let's say next three years? Will protein bars remain the largest contributor, or do adjacent categories like beverages and snacks have the potential to become meaningful growth drivers?

Very hard to predict on which part will grow much bigger. Each one of them has substantially large possibilities.

We are driving each one of them with the equal level of conviction. Right now, bars constitute the largest part of our portfolio, but three years out, hard to predict today.

Okay. My second question is Everyuth continues to gain market share in facial cleansing.

Beyond the current portfolio, do you see any opportunity to expand into adjacent skin care categories while maintaining profitability?

Yes. While our core remains in facial cleansing, and within that there are enough space for the core to grow—basic scrubs, peel-off, face wash—but within that, we've been exploring around new proposition like tan removal, anti-pollution, and other things that we have in our pipeline.

Beyond that, we are certainly exploring, but I think in a smaller way because there is enough resources required to just drive this growth in a profitable way. We'll keep piloting and exploring and expanding in the other spaces too till they become sizable and meaningful.

Today, I think our priority remains on facial cleansing, where we see a big enough room for growth and make this brand sizable skin care brand.

Okay. Got it.

That's all from my side, and have a good day.

Thank you once again for taking a follow-up. I had a question on the RightBite side.

When we acquired, I think it was around 200 or 220-odd crores if I remember. Was that the number when we acquired the business size?

FY '24,

when we acquired, we had acquired in quarter 3 FY '24. Reported number was close to about 130-odd crores.

120. Closer to 120.

120, yes. When we look at the market and the various expansion of distribution which you have done apart from the quick commerce, we also see a good visibility now in offline channels.

I just wanted to understand that while the business continues to grow from the time when we acquired, has the number of SKUs also gone meaningful change? Means I'm not asking only in terms of the grammage change which we see in the market, but the number of SKUs, is that the big driver of the growth or is it the old portfolio SKUs which are driving?

How has been the growth if you can add some color on it, and what is the strategy behind this product expansions?

The core which we acquired, some of the lead products continue to drive the growth of the core. We have expanded ourselves into multiple newer spaces and which includes newer protein bars like wafer bar, which is a millet-based wafer bar.

We've also launched Roots, which is a tradition of ghee, jaggery, and dates. These are two sizable platforms in protein bars that we have launched in last four quarters.

We have launched Korean-flavored chips. We have launched RTDs, which we did not have a presence in.

As we speak, we're also expanding our range on the Max Protein cookies. We do believe that each of the portfolios, while the core will continue to grow, we are expanding and reaching out to new consumers through wider range of products, which help us gain faster acceptance.

It's not just the original products, but new expanded portfolios helping us drive this growth.

Okay. Sir, on Everyuth, just wanted to understand, is there any plan to expand this in the B2B professional facial cleansing market,

or

we remain B2C?

Not right now. We remain focused on B2C as of now.

Okay. Thank you so much.

Thank you, and wish you all the best.

Thank you.

Hi, team. A quick follow-up from my side.

For this quarter, what will be our A&P spends as a percent of our overall sales?

Sorry, Aniket, could you repeat? What will be our percentage what will be our—

Advertising spends as a percent of our overall sales.

At our overall reported level, our A&P as a percentage of total sales is at 18.2% for the quarter. That includes Comfort Click because Comfort Click has a much higher percentage involved in this.

Okay. Like-for-like, has it increased over the past year?

Like-for-like, it is similar to last year on the core business.

Sir. How are our digital spends?

Digital spend as a percentage of overall investments is only shooting up because consumers are consuming a lot more of digital media and engagements are easier and sharper with digital media. The share of spends is completely pivoting towards the digital space across platforms.

Okay. Thank you.

Thank you everyone for joining the call. We'll see you next quarter.

Stay healthy and happy. Thank you.