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					December 9, 2009

Zydus Wellness Ltd.
Market Performer; HOLD
Company Info CMP Target Price Sector 52 week H/L BSE Code NSE Code Face Value Market Cap 273 303 Food Products 301.65 / 52 531335 531335 10 1,067

INVESTMENT RATIONALE
Zydus Wellness is a consumer product company having well established brands like Sugar Free, EverYuth & Nutralite. The company is a market leader in the sugar substitute (Sugar Free) market having market share of 82%. In the EverYuth segment it has a market share of 96% in orange peel products, 69% in Scrub segment & 11% is face pack. Nutralite (alternative to butter) enjoys a market share of 75%. Key Developments The company is targeting turnover of Rs. 500 crore by FY14E. According to the company market for each category has a potential to grow at 15-20% going ahead. The company is looking at brand extensions in various categories. All the products the company has presence in are urban centric with company having presence in 850 towns. Q2CY09 Financials: Sales up 37% y-o-y to Rs.64.9 crore. All the 3 categories grew and contributed to boost in sales. Sales increased mainly because of shortage of Amul butter in the market. EBITDA up 51% y-o-y to Rs. 14.2 crore. OPM up by 198bps to 22%mainly because of decline in inventory & consumption of materials. PAT up 41% y-o-y to Rs. 8.5 crore on account of operating leverage & increase in other income. NPM increased by 30bps to 13%. Valuations At current price of Rs 273.2 the stock is trading at 46x FY09 EPS of Rs. 5.8. We recommend a “HOLD” on the stock with a 12 month target price of Rs. 303.0.

Price Performance % Absolute Relative to Sensex 1m 5.4% 50.2% 3m 58.7% 49.1% 1yr 355.3% 142.2%

Shareholding Pattern (%) Promoters FII Institutions Public & Others 74% 13% 2% 11%

Disclaimer : This publication has been prepared solely for information purpose and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, investors are advised to satisfy themselves before making any investments. Kisan Ratilal Choksey Shares & Sec Pvt Ltd., does not bear any responsibility for the authentication of the information contained in the reports and consequently, is not liable for any decisions taken based on the same. Further, KRC Research Reports only provide information updates and analysis. All opinion for buying and selling are available to investors when they are registered clients of KRC Investment Advisory Services. As a matter of practice, KRC refrains from publishing any individual names with its reports. As per SEBI requirements it is stated that, Kisan Ratilal Choksey Shares & Sec Pvt Ltd., and/or individuals thereof may have positions in securities referred herein and may make purchases or sale thereof while this report is in circulation.

KRC RESEARCH

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Zydus Wellness Ltd.

December 9, 2009 Kisan Ratilal Choksey Shares and Securities Pvt. Ltd. 1102, Stock Exchange Tower, Dalal Street, Mumbai 400 001. Head-Off Phone : 91-22-66535000 Fax : 66338060 Branch-Off Phone : 91-22-66965555 Fax : 66919576

Members: BSE & NSE www.krchoksey.com

KRC RESEARCH

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