Zydus Wellness Limited (ZYDUSWELL.BO) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Zydus Wellness Q1 FY '26 Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Dhiraj Mistry. Thank you, and over to you, sir.

Thank you, and good evening all. First of all, I would like to thank management of Zydus Wellness to give this opportunity to us. From the management, we have with us Mr. Ganesh Nayak, Director; Mr. Tarun Arora, CEO and Whole-Time Director; and Mr. Umesh Parikh, CFO. Over to you, sir.

Good evening, and welcome to the post results teleconference of Zydus Wellness Limited for quarter 1 financial year 2025-'26. I have with me like Dhiraj mentioned, Mr. Ganesh Nayak, who is the Director on the Board; Mr. Umesh Parikh, CFO, in the call. During the quarter, consumption trends highlighted a continued divergence across geographies. Rural markets sustained their growth leadership, outpacing urban areas, driven by strong performance in branded commodities, Personal Care and dairy segments, while seasonal categories faced headwinds due to a shorter summer and unseasonal rains. The non-seasonal portfolio remained strong, cushioning overall performance. On the cost front, persistent input inflation is beginning to show signs of easing, providing our optimism for margin recovery in the coming quarters. Meanwhile, the digital channels such as quick commerce and e-commerce continue to deliver strong growth. Tier 2 and Tier 3 cities are emerging as key growth drivers, positioning the business well for its next phase of expansion. The company reported a consolidated net sales growth of 2.2%, amounting to INR 8,577 million for the quarter, navigating through the challenges posed by early monsoon conditions, which impacted seasonal brand performance. Encouragingly, excluding seasonal brands, the company delivered a strong double-digit growth, which includes Ritebite Max Protein business that is not in the base, hence, reflecting the underlying strength of its portfolio and balanced business model. At the segment level, the Personal Care segment grew 3.8% year-on-year for the quarter despite early monsoons impacting Nycil brand and dampening the demand in weather-sensitive category. A healthy CAGR of 21.1% over quarter 1 of financial year '22 underscores the portfolio's structural strength and our long-term potential. The Food & Nutrition segment recorded subdued year-on-year growth of 1.6% for the quarter as softer seasonal demand significantly impacted Glucon-D. Ongoing portfolio diversification and contributions from acquired business helped mitigate the impact at the segment level. Importantly, the segment maintained a consistent CAGR of 7.3% over quarter 1 financial year '22, reinforcing its relevant and sustained growth momentum. Organized trade saliency continued to improve, reaching 30.9% in the quarter 1 financial year '26, up from 23.3% in quarter 1 financial year '25. Within this, e-commerce contributed 14.5% and non-trade 16.4%. Over the past 2 fiscal years, FY '24 and FY '25, we have delivered a cumulative gross margin expansion of 361 basis points, driven by proactive strategic hedging, a favorable product mix and a disciplined pricing actions despite the challenging inflationary backdrop in the -- that we had experienced. In the current quarter, however, gross margins registered a marginal decline of 73 basis points at overall level. Nonetheless, majority of our brands continue to deliver strong gross margin expansion, underscoring the inherent strength of our portfolio. The saliency of seasonal brands was temporarily impacted by shorter than usual summer and unseasonal rains. On the EBITDA front, company delivered a growth of 0.2%, reaching to INR 1,556 million for the quarter. At the PAT level, the decline of 13.4% was primarily driven by non-cash items like amortization of intangible assets from acquired business and deferred tax impacts. During the quarter, the company returned to a net cash positive position, strengthening its ability to participate in large projects, infrastructure development and automation initiatives aimed at building the business for the next phase of growth. With that, let me share some of the highlights of operations for the period gone by, which will also cover category growth and market share numbers as per MAT June 2025 report of Nielsen. On the Personal Care front, Everyuth consistently grew -- has shown a consistent growth that is led by sustained double-digit performance, driven by innovation, product excellence, strong distribution and customer-centric experiences. Our superior offerings and targeted marketing have successfully expanded the user base year after year. Everyuth leads key subsegments with a 48.7% share in scrubs, which is a positive of 262.3 basis points year-on-year and 77.2% in peel-off masks, a drop of 56.4 basis points. Overall presence, the brand ranks fifth in facial cleansing with a 7.8% share, up 88.8 basis points year-on-year. Nycil saw a temporary dip this quarter due to early monsoons, but maintained its #1 position with a market share of 33.3%. On the Glucon-D front, Glucon-D maintained its leadership in the glucose powder category with a market share of 58.9% at the MAT level. The glucose powder category grew by 2.8% at the MAT level. However, the category declined for the quarter. Glucon-D Activors, the Electrolyte Energy Drink was rolled out across the broader national footprint, performing as expected under the revised distribution strategy aligned with the weather-driven demand patterns. On the Complan front, the nutrition drink category has reported a decline of 2.6% at the MAT level with the continued softness across key metrics. Brand currently holds a market share of 4.0% at the MAT level. On the sweeteners front, Sugar Free brand continues its -- to maintain its dominant position, holding a commanding 96.1% market share in the sugar substitute category, which has grown by 4.9% at the MAT level. Sugar Free D'lite delivered encouraging results with deeper distribution and health-conscious snacking trends driving the momentum. The Sugar Free Green continued to outperform, reflecting strong consumer affinity for natural alternatives and sustained volume-led growth. I'm lite continues to promote healthier living through ongoing campaigns, encouraging consumers to switch from regular sugar and cut calorie intake by half, supporting easier weight management and better daily choices. On the Nutralite front we continue to broaden the portfolio through focused innovation year-after-year, growth momentum sustained by robust execution from focused B2B and B2C teams, enabling deeper market penetration and operational efficiency. On the Ritebite front, post the successful acquisition of Naturell (India) Private Limited in the later part of the previous year, the business continues to outperform the earlier estimates, reinforcing our strategic intent and portfolio expansion strategy. Brand delivered robust growth during the quarter with Ritebite Daily Bars leading the performance and further strengthening the brand's position in the high-growth, better-for-you snacking category. Our strategic priorities continue to focus on margin resilience, tech-enabled efficiencies and sustainable growth through innovation and disciplined expansion. Thank you. We will now begin the Q&A session. Over to the coordinator.

[Operator Instructions] The first question is from the line of Tejash Shah from Avendus Spark.

Sir, just first, wanted to start with the organic volume growth and value growth for the quarter would be? Hello?

Sorry, it is near to flattish. We don't give specific, but it's near to flattish. The incremental has largely come from -- yes. And excluding seasonal brands, it is anyway double-digit on its own as well.

Double-digit is volume or value -- volume as well or only value?

Both. The ongoing business without the acquisition, without seasonal brands is both volume and value. If I add the seasonal brands back for organic growth, it becomes flattish.

Flattish. Okay. Clear, sir. Sir, second, I was not able to reconcile 2 statements on your presentation. We are still seeing that rural is doing better than urban. But when I see our organized trade saliency, it has actually gone from 23% to 30%. I'm assuming that will be largely urban indexed. So just wanted to understand where am I missing the point?

So I think the point I made was initially at an overall level what we see as a direction when we read the market and we look at the data from the secondary markets and our own read of the market, that rural markets are performing. For us, actually, the significant movement this 23% to 30% is driven by also amalgamation of this new business, which has substantial quick commerce, e-commerce business. And therefore, the share of that business has gone well -- has shot up. But they are both right in that sense. Rural markets are better, performing consistently. We see better traction in the general trade from our small pops strata, lower population towns, more than the top metros. But having said that, in the metros the growth is largely driven by organized -- large towns are driven by organized trade, and that's, I think, a shift we all know about. And this number has shot up further because more than half our business -- of the acquired business is coming from e-commerce, and therefore the saliency shifts. And the third element driving this is also because both Glucon-D, Nycil, our seasonal brands, have a highest share coming from rural, and therefore, the mix also changes. So there will be -- that element also which changes. So one is data. The other is of the overall market trend that is playing out.

And sir, just wanted to understand -- very clear, sir. Sir, just wanted to understand, as we enter this low saliency quarters now, which are low impact on revenue and profitability, the seasonal pushback that we saw this quarter, does it carry forward in 2Q, 3Q? Or it's done and dusted in this quarter and 2Q, 3Q are kind of clean slate from growth perspective?

So mostly it is done and dusted. There is some numbers which flow into July because especially Nycil plays out here, and a little bit of Glucon-D also. Post July, August, there is a very, very little impact. So some bit you might find in Q3, but not significant. But after that there's limited impact.

Perfect. And sir, last one, if I may. Looking at the rough start that we had for the year because of this unseasonal rains, where do we kind of land up on our margin expansion guidance for a 2-year view. I know that it is 18%. But what part of that guidance we can achieve this year as well?

So I'll tell you, I would look at what are the fundamental actions we need to take, and there is an external part to it. First of all, we need to drive through 2 or 3 actions which we have talked about. One is product-by-product gross margin expansion, which is a tick mark. Yes, we are product-by-product, SKU-by-SKU, we are focusing on gross margin expansion, some of which has already played out and will continue to play out. This quarter, the gross margin reported is lower, which is more of a product mix issue, but my actions are in place. In a normal year, you will find that giving the results that we intend to. The second key action that we believe that will help us improve our EBITDA margins will be, as we scale up some of the operating leverage is playing out. That also, we are a quite cost-conscious company, and our growth intent is playing out very well. So seasonal is, as we have mentioned earlier also, over a 3- to 4-year period continues to be double-digit. And therefore, the basic thesis of higher growth leading to operating leverage will also play out. A percentage here and there, but the 2-year journey of enhancing my EBITDA, I don't think we are moving away from that basic view. To my mind, you may find a quarter here and there, but directionally, we are -- we think we have taken the right actions will play out.

[Operator Instructions] The next question is from the line of Mayur Parkeria from Wealth Managers India Private Limited.

So first of all, congratulations to the management for delivering double-digit ex of the seasonal impact, and in an environment where consumption trends still remain relatively weaker overall, that's a great thing to look at. So with that comment, just small 2 questions from my side. One is, actually you just partly mentioned that, but maybe to get more clarity. Irrespective of the seasonality and quarterly ups and downs, do we believe that -- and last FY '25 entirely, we grew almost 15%, more than that. Do we believe that structurally over the next 2 years, we are in a double-digit revenue growth cycle. One is at an overall industry level, especially for the products where we are, and at the company level more firmly?

So I can talk about company level. For sure, we believe that we are on that path. So over next 2 to 3 years, we'll continue on a structural double-digit growth journey. And most of our products will be doing that. 1 or 2 products may have some challenges, which you've talked in the past, some category-led challenges. But largely most of our products will remain in that path.

Okay. And we were on our journey to increase our advertisement and advertisement spend structurally over the last 2 years. On an annual basis, can you give us an understanding how -- where should we see this number stabilizing from FY '25 levels till in the next 2 to 3 years? And will the operating leverage also come from there? Or we are still in the phase where percentage of sales, this will continue to slightly move up?

So in short to medium term it will remain at a similar level as FY '25, because we also want to invest back increased gross margins into helping us increase our growth momentum, and it's essential for us. But over a longer term, yes, we will see more efficiencies coming through. But advertisement is just one of the things. There are several other fixed expenses, which include -- which come from other expenses, the overheads, people expenses. There we do see that operating leverages will play out even better.

Right, right, right. Okay. And just to -- along with this, from a distribution setup, can you give us some qualitative numbers in terms of our direct reach, where do we reach? And in the light of quick commerce becoming more and more dominant from a growth -- incremental growth perspective, do we see -- do we still believe and see that direct reach and the traditional channels' reach will become critical for our growth as we go ahead?

Yes. So it's an interesting and a very important question, because these are things that we have to think, given the way market is reorganizing itself. So from a very, very urban top city point of view, I think quick commerce is changing consumer habits significantly, and therefore, we may or may not be necessarily driving our distribution expansion. But at a national level, our current direct reach is -- direct coverage is about 6.1 lakh, 6.2 lakh outlets. We are available, as reported by Nielsen, by 2.8 million outlets. Our wish list is to expand that 2.8 million to 3.5 million first and maybe eventually 4 million, assuming there's no major structuring of -- restructuring of the market that happens. Towards that, we are looking at expanding another 80,000 outlets in this financial year. We still believe there's enough room for expansion, because we are building the categories. Our job is to being a market leader to expand the categories, drive penetration. Therefore, we are still committed to drive our direct distribution and take it to, hopefully, by -- to about 7 lakh by the end of this financial year. And that's something we'll continue to do, while building our capability both in e-commerce, quick commerce as well as non-trade. So organized trade continues to increase, but we continue to also invest in general trade because the smaller population towns, rural is still underserviced as far as the organized trade is concerned. And therefore, this will continue to play a more important role.

That's great to hear. Can I squeeze in one more question, please?

Okay.

Actually, from the product side, can we get an understanding of where are we -- what is our plan for the next 18 months in terms of new product, whether enhancements or changes? Because just like in automobile, we see there is -- the importance of new product launches and enhancements are also very critical, whether small changes or big changes. So in terms of number of products, if you can give some perspective what are we planning over the next 18 months, relative to FY '25, what all we did?

Sure. I understood your question. So FY '25, we had 12 launches. I'll tell you I don't have a specific number to share over the next 18 months. But I'll tell you 2 things that will drive our strategy or choices. One is that consumers' expectations are changing at a much faster pace than most of us can handle. I had some industry leader from FMCG talk about smaller brands are no more -- cannot be taken lightly. The fact is that new brands are coming in and disrupting the space. So making -- keeping our brands relevant for the future is extremely important. So we will be constantly working on upgrading our existing products. Which of them will come up for launch in 18 months? I cannot share. So that's one fundamental we will do. Plus, we have a few more products in our pipeline, in our innovation pipeline, which will follow through, some of which in the coming months. Since they are not in public space, I am not able to share, but we will continue to build it. So both NPDs and relaunch of our existing portfolio is very high on our agenda to stay ahead of the curve and grow ahead of the industry.

The next question is from the line of Nikhil Upadhyay from SiMPL.

I think appreciation for the good results and the good performance the company has displayed this quarter. Sir, one question. If we -- as you mentioned that if we adjust for the summer heavy brands, we've grown double-digit. Can you talk about -- can you rank which would be the brand which have grown fastest? And specifically zooming on Nutralite, because if we've seen a lot of product launches and product innovation we've done in the last 1, 1.5 years, how are those new product launches playing out now? And what proportion of revenue of total Nutralite they would be today?

So I could say that from a last year's base and a comparable base, I think 3 brands that stand out in terms of growth is our new acquisition, Ritebite Max Protein and Everyuth, followed by Nutralite. These 3 brands have had a significant growth, driving our non-seasonal brand growth agenda and pulling the numbers up substantially. From -- for your second question on Nutralite, specifically, what is really driving our portfolio up? I think 2 or 3 things that is helping us. Our base business, our core, which is fat spread, continues to drive the momentum. So that's essential for us to get right, and that continues to keep moving up. Having said this, the new part of the portfolio where we want to be a fair dairy and spreads, mayonnaise as well as our branded fat, if I were to say, butter and ghee branded ones. That has really helped us also move it up. But that's -- I think most part of the portfolio is playing out. Our chocolate spread has not kept to the promise, but it's still very small. But we've also not talked very big about it. But fat spread, value-added dairy as well as mayonnaise, all have played out as per expectation, ahead of our budgets. In fact, we've also launched cheese in the food service. Early days, but early response looks good. So we continue to move forward on Nutralite on a consistent basis.

Sorry to interrupt. The current participant got disconnected. So we will move to the next question.

Thanks. Maybe we can get him back. Yes.

The next question is from the line of Kinjal Mota from Banyan Tree Advisors.

Sir, I wanted to understand what is your long-term view on the HFD category, the nutrition drink category? And how much does the South currently contribute to this business?

So I think it's an interesting question. I think all players in HFD are grappling with this. But let me just put it like this. There are 2 or 3 parts which we need to keep in mind. First of all, HFD has stood -- long stood for nutrition. Now nutrition is something which today's consumer is very concerned and tuned on to. Having said this, consumers' relevance -- I mean, relevance of HFD as the single source of nutrition has dialed down and people are seeking various other ways of getting nutrition. And that's why this category has come under pressure. People have gone on to several other formats, products, new age brands and traditional ways of getting nutrition, and that's really impacted this category. In my view, it will, in medium to long term, still deliver a sustainable low digit -- low single-digit growth. I don't know. That's my view still. There is good reasons for it. Only time will tell. But -- and we do believe that done right by playing the right segments, there is still room for growth, and therefore, we are still working on it and some of our initiatives support that. And that's why we have done slightly better than the category, largely because of being trying to differentiate ourselves by offering some superior nutrition and consistently pushing ourselves into new ways of working. Having said this, I don't -- I can't share the specific share of business as we don't. But -- so overall, category is about INR 7,000 crore on an MAT basis. And our market share is 4%, though, of course, a large part of category is also shifted to e-commerce, which is not reported. So I mean, you could do your mathematics, but this is some of the direction that we could help you with.

Sure. We understand that you could not share the number of how much does South contribute currently. But any direction on whether the contribution from South region has declined over the years? And if so, what are the reasons behind the same?

So incidentally, I won't say by South or North. I think Tamil Nadu is one of our -- in the South region is one of our key markets. That has stayed consistent for us. Overall, at the category level, it has come under pressure. But for us, it has remained quite consistent by our actions. In fact, we were more under pressure earlier years after acquisition, but we've done rather well in the last 2 to 3 years on sustaining that business.

Sure. That makes sense. And if I could pull out one bookkeeping question. So in our financial report other marketing expenses, which are categorized as a part of other expenses. If I were to look at that number, it has grown significantly in last 5 years, that is at 30% CAGR. I was just trying to understand that how is it different from normal A&P spend because it is categorized separately. If you could just help me understand this.

Are you pulling it out of the Annual Report, is it? Because we don't...

Yes, yes. So it's in the consolidated financials, if I were to look down into the other expenses head there is a separate line item called other marketing expenses.

So these are -- which are non-traditional expenses, things like doctor detailing and some CSD commission, which are kind of marketing, but not real marketing -- advertising and marketing expenses, but impact our business support. So some of those things get captured in those. Some go-to-market expenses may happen, so some of those things get captured. And therefore, since we have increased our presence with doctor detailing for Sugar Free and Complan, some of those will look disproportionately high growth, but may not be significant in absolute.

Sir, thank you. I am a colleague of Kinjal. Just had one question, if I can ask. Sir, you subsumed Sampriti into Nutralite...

Sorry to interrupt. Can you please be louder?

Yes, sure. Am I audible now?

Yes.

And the question was, sir, we subsumed the Sampriti brand into the Nutralite brand. And now we have also launched soap under Nycil some time back. So just wanted to understand your thought process behind brand extension, especially in segments which are not closely related to the core segment. And again, these new segments are more competitive than your existing segment, so how do you think about standing your brand there?

So these are 2 different things. First of all, soap extension, Nycil is very tactical one and only directed at Middle East, which is more opportunistic. At a strategic level in most of our -- largely our business is India centric, we haven't done it, and therefore, there is no specific plan is ready to share as far as the soap and Nycil is concerned. As far as converging Sampriti brand into Nutralite is concerned, it was a very strategic call taken right at the time of acquisition, we had thought through it because we believe that Nutralite is a large brand. It has huge potential. And consumers don't see it as dairy or non-dairy, but it actually meets all dairy and spreads requirement and can become one of our largest brands in future if we run it right. And therefore, this convergence of Sampriti into Nutralite DoodhShakti has really helped the brand grow much bigger and much faster and also becomes more efficient from our investment perspective as well.

Got it. And Nutralite, to a large extent, was a B2B brand, but do the consumers still retain or recollect the Nutralite brand?

So our share from food service still remains much higher, but the retail leg to it is consistently expanding, and we continue to believe that both these parts, both food service as well as B2C will continue to grow both and therefore, make it a much larger brand.

The next question is from the line of Nikhil Upadhyay from SiMPL.

Sorry, I got dropped off. My second question actually was, if you look at Max Protein and historical numbers, it was sustaining that 30%, 35% kind of CAGR growth. Coming into our fold, have we been able to increase the rates? Or how is the distribution acceptance of the brand? And is it sustaining that historical run rate of growth?

So I'll go back to what I talked about when we acquired Max Protein business. Ritebite brand has historically grown more than 25%, and we had said that we envisage a 25% plus over next 4 to 5 years. I'm happy to share that our actual -- while we don't give specific brand-wise growth, but happy to share that the current momentum over 6 months of -- actually 7 months of acquisition is much, much higher than what we had accounted for, and it is gaining substantial acceptance across all channels. We have also launched or in the process of launching more products through this portfolio, and we believe there is -- it has been strategically a good purchase for the business, and we see a long-term potential only enhancing ahead of what we had imagined at the time of acquisition.

Okay. I just have 2 questions. One is, have we been able to put Max Protein into the GT channel now? And how is the acceptance across the GT channel where we've placed it?

Max Protein does very well in GT. We have a significant share in general trade. We are probably, by far, the largest brand in bars in this space.

Okay. And last question. See, this is a quarter when the summer portfolio used to always drive the margins. But even though -- and I could be wrong here. By my calculation, it's like our summer portfolio is down at least 10% to 15%, but still the margins are sustained. Would you say that to a large extent with the growth of the other brands, to some extent, our profitability is now immune of the summer portfolio performing? Like even if they don't perform the company can sustain the profitability, because historically, it used to be a summer portfolio did not perform, the margins used to take a hit. So is it a good inference to make now?

I think it's taken a lot of effort by the team to ensure that we are able to manage and overcome the challenge of summer brand. I am not imagining a situation that we'll be immune to seasonal brands not performing. It does impact us because they are a very critical part of our portfolio. Over the last 4 years, like I mentioned, we have seen a good double-digit growth from both the brands. And they are -- they add to our operating leverage, they add to our gross margins disproportionately. So it's very important. Yes, we -- I think I would credit a great work by the Zydus Wellness team in managing a tough environment. But yes, the team has really come up to the challenge and handle it. But immune to seasonal impacts, not yet.

The next question is from the line of Ajay Thakur from Anand Rathi Securities.

So just wanted to check on the breakup between Everyuth and Nycil, how it would have panned out given the fact that Nycil is more summer centric, so we would obviously have seen some decline. Maybe if you can just specify, if not quantitatively, but more on a qualitative basis, the growth for Nycil. And also if you can also highlight the growth for Everyuth in the same vein?

I think while we do not -- like you rightly also figured out, we do not share brand-specific numbers. This is one of the few exceptional quarters where we have struggled on Nycil because of the sustained monsoons. Otherwise, historically, even in difficult seasons also Nycil does manage to do well. So obviously, that shows how deep and how long sustained the rainy season has been and impacted the overall seasonal impact. Having said this, Everyuth has had a phenomenal -- continued a phenomenal run that it has had, and we continue to be very excited about the opportunities that Everyuth has created for our growth. So that's all I can share at this.

Okay. So would it be fair to say that Everyuth growth momentum, which was there or similar kind of a growth momentum that we had seen last year is kind of maintained in Q1? Will that be a fair statement?

Yes, momentum has continued, absolutely.

Okay. And you had alluded to cheese segment being entered in the food services domain. How big this segment would be? And who would be the players over here? If you can just give some more details in terms of what kind of opportunity lies ahead? And can it be as big as maybe something like a margarine for us in the B2B?

We are early days into it. Look, our biggest part on food service is still fat spreads. We've got into mayonnaise. Cheese is early days. We've just done a few months of numbers. So I cannot say, but yes, potentially, it could -- I mean, it can -- because cheese as a segment is so large it could catch up with our margarine, fat spread kind of business. But that's a long way off. It's a lot of hard work for the team to work on. But yes, it's promising, and it also strengthens our Nutralite DoodhShakti platform. And the initial acceptance has been very good. So we are quite positive about what we could build on as we speak. The other players, of course, are the regulars that you would know in dairy segment or analogue segment, which includes the likes of Amul, Parag, et cetera. They all have -- all those players have their presence in this.

Understood. Also wanted to understand a bit more on the VieMax. If you'd shed some light on how the Complan VieMax actually doing post its launch? What kind of growth are we seeing in this launch over here? And how can we expect the momentum or what can be expected going forward from VieMax?

So Complan VieMax is basically adult nutrition space. Overall, the category is not growing super, but I think we've made our initial good impact. We've seen a lot of doctors -- so we have taken a hard route of following something which is not our inherent strength, go to an expert route marketing, which is the health care professionals, the doctors supporting it. So it's a strength that we are building and learning. We've seen some doctors really prescribing it, and that gives us confidence that our formulation is good. The doctors are happy with our proposition and recommending or prescribing it to their patients. And that helps us believe that there is good potential in it. But it's early days. It's still small, and it's a long haul. We believe will only strengthen the overall mother brand Complan as a superior nutrition space, spanning several segments from toddler to kids to adult now. And we'll need to do more work and probably in next 2 to 3 quarters, we can share more updates as we move along when we have more sizable actions on this.

The next question is from the line of Yashowardhan Agarwal from IIFL Capital Services AMC.

I had couple of questions. So first one is on the growth. So if look at our product categories, sir what's the category...

Sir, can't hear your question, you can just repeat?

Sorry, excuse me. Start...

Sure. So sir, my question is on the growth. If I looked most of our products the categories...

Sorry to interrupt, sir. Your audio is not clear.

So most of the products that we are presenting, most of the categories are actually penetrated and we are market leaders in it. So just wanted to know that will our growth be linked to the category growth or won't it be? And if not, what are the steps that we are taking so that we can assume that our growth would be better than the category, if not in line? So that's the first question.

Okay. Can I answer or you want to ask your second question simultaneously in advance?

No, sir. You can answer this, and I will ask the question again.

Okay. So first of all, I think if you really look at it other than Complan, most of the brands that we have, they operate as market leaders in the space -- in their core categories, whether you look at Nutralite, Sugar Free, Everyuth scrubs, Everyuth peel-off, Glucon-D, Nycil. Now -- and we have significant market shares in most of these categories. So we see our role as driving the category. We are not driving market share. Market share, of course, is a byproduct. We are very happy to take higher market share. But if I were to take an example, I would be very happy if glucose powder becomes INR 1,100 crore category to a INR 1,500 crore category rather than worry about whether my market share is 59% or 61%, because if the category grows, I will grow. And therefore, as a market leader, our task is to grow those categories. Having said that and working the core on category development, which is through brand-led communication, building relevance, driving distribution, being available across omnichannel. The other opportunity is because our brands are so large and so -- sorry, so strongly franchised with the consumers, where there's a very strong pull for that, we're also leveraging our brands into extensions where there is opportunity to grow much faster. And there may be larger categories and we may start as a challenger. And for example, we just talked about Nutralite and mayonnaise or cheese. For example, Everyuth getting into body lotion, Sugar Free extending into foods like chocolates and cookies. So these are much larger categories. So while my core job is to expand the categories and category development, I'm using extensions to play in larger categories and leverage our brand with a differentiation, which will help us drive growth. So that's the overall playbook of how Zydus Wellness will play across categories. And therefore, innovation engine, which works on improving and continuing our relevance in core and building our brands there, as well as getting into new spaces is how this route comes together. And we believe that will be the way to success for our overall business as we move forward.

Got it, sir. And the second question is on the margins. So we have guided earlier as well that we are trying to improve our gross profit margins. So is it on the basis of we are expecting softness in raw material prices or change in SKU or probably launching new products. So what are the reasons for it?

I'm not going to rely only on new products to improve our gross margin. Some places we can, some places, it's harder. So new products will follow a certain minimum margin levels. But the core categories have to improve margins, which happens through multiple actions, which is price increases, calibrated price increases where there is opportunity and the consumers are willing to pay. But more importantly, managing our cost side very well. So managing our commodities right, taking future hedges and whatever actions, contracting for a period of time, all set of actions. And if the costs are not managed, then passing it on to the consumer, because being market leaders we have a reasonable pricing power. So all these actions come together to drive product-by-product enhancement of gross margins.

[Operator Instructions] The next question is from the line of [ Srini Makharia ] from Finspurt Analytics.

Actually, I wanted to ask about your products such as Complan VieMax, Sugar Free and Nutralite because do you think that they will benefit from GLP-1 trend also?

Yes, there is a GLP-1 trend that we are aware of. I can't answer anything in specific because those things will play out in the marketplace. So obviously, there will be impacts of how GLP-1 plays out.

No, because your Complan VieMax was prescribed by doctors, so there might be a chance that -- because for the GLP-1 nutrition has been prescribed by doctors. That is why I was asking that will there be any, like, subsequent benefit to them also?

So our products are supportive of GLP-1, but we leave it to the doctors to understand and do the needful.

Okay. I have one more question regarding the taxation. So for '26 and '27, you said that there will be 0 tax. And so what will be the guidance for further years, if you can, like, tell us?

So from this FY, which is '25 '26, there won't be any tax. For next year, there could be some minimum -- maybe marginal tax, maybe you can tax at about 8%, 10%. And going forward, in the next year, it will be at a full tax rate, which is at the rate of 25%.

The next question is from the line of [ Harshit from Golechha Family Office. ]

Sir, you have mentioned that in July, August, there will be a slight impact for the seasonal product. Sir, despite of this, on a like-to-like basis, are we confident of showing double-digit growth in first half of this year, sir? This is my first question, sir.

We can't give you any specific quarter-by-quarter guidance. We've just given you a sense of what happens. But you'll have to take the interpretations yourself for that.

So is it fair to assume the majority of the impact has already been absorbed in Q1 and July, August is not going to be a majority for Glucon-D and Nycil, sir. Only for the seasonal part of the business, I'm asking, sir.

Correct, correct. So most of it has been absorbed in quarter 1, the impacts. July, August is a smaller -- much smaller part of it.

The next question is from the line of Ravi Purohit from Securities Investment Management Private Limited.

A couple of questions. One was, we don't share brand-wise sales and numbers for the business. But we do provide a table in our presentations, which give you the category size and the market share that we have in that category. So is it fair to assume that when I multiply the market share and the category size, I should get the broad sense of the revenues for those particular products? And if I map those out over a period of time, that should give me like a trend of how the sales have progressed for those individual brands?

So we don't share those brand-wise specific numbers. What we have put out there is what is available in the public space, which the syndicated data from Nielsen shows. It may be helpful for you from a directional point of view, but its adequacy is for you to judge. Because like I...

Would you take it? I mean, would you rely on it?

Basis. So it may vary from brand-to-brand basis of the coverage of Nielsen sub-brands covered or not covered. So therefore, you will have to put your own judgments to it.

No, no, I know. But I'm just saying as an industry participant and as a contributor to various surveys, would you rely on that -- those numbers? Or should we kind of avoid? Because it will kind of -- you're putting it out in the presentation for us to see. And if it is put by the company, then we should be able to make some sense out of it, right? So that's what I'm trying to understand. If you could help me give some context whether the data is reliable, less reliable, partially reliable, not reliable at all. So at least we can use it from an analysis point of view, right? And we can do it like a 5-year trend numbers on those. For example, sugar substitute Sugar Free says INR 370 crore category size and our market share is 96%, which effectively means our sales for Sugar Free alone should be INR 350 crores, right? So that's the place that I'm coming from.

Like I explained to you, it is directional in nature. It cannot be precise because the coverage category by category is different. Also with e-commerce covering, it does not cover e-commerce sales also. Actually, Nielsen relies only on modern trade -- part of modern trade and general trade and they give their numbers. So therefore, these are directional. Our trust on Nielsen is not like we are believing, but it helps syndicated third-party data for you to assess us on that. That's why we put it out. We are not saying that please judge us only on that. We have real numbers, which we are sharing with you.

Right. Fair, sir. And sir, second question is, when we acquired Heinz's business, right, and we merged into our own company, so Heinz -- when it was part of Heinz it was a full taxpaying business. When it came and folded into our company that business became tax-free, so to speak, at least from the reported tax. The same thing will also happen with Ritebite once it kind of gets liquidated into our company, that will also have no tax liability, so to speak?

Not fully, because Heinz business, there was a very high amount of intangibles playing out. And that time, the depreciation of intangibles was allowed. Now under the income tax, but the depreciation of goodwill has gone. So to the extent of the brand valuation, we get the tax shield, but not fully.

Okay. So there will be some tax, but we will still be -- is that the reason why we are kind of liquidating like that company into this listed company, right? I'm assuming to get the tax shield.

There are business rationals for liquidating the company and liquidation is much faster route for integrating the business activity.

Okay. And sir, just one question on this Ritebite protein...

Sorry to interrupt, sir, may I request you to rejoin the queue as there are several participants in the question queue. The next question is from the line of Pavan Kaware from Nayan M Vala Securities.

As I know, the company is not disclosing the numbers for Ritebite, but if they can share for the FY '25 numbers for Ritebite?

Sorry, we cannot share numbers for the acquired business like we mentioned.

But you have the numbers at the time of acquisition, and we told you that the business has grown at the pace of 25% CAGR. And currently, it has exceeded the projections that we have built in at the time of acquisition.

You can get the directional numbers on that, but we don't share.

For '25, we don't disclose. Because in '25, we have for just 1 quarter. And for overall year, what was the number?

That the number at the time of acquisition at the time of acquisition for the last financial year, it was INR 130 crores.

INR 130 crores.

INR 130 odd, INR 130 crores for FY '24. After that, after the acquisition, it's part of our business, and we follow the same system as for other brands. So it will be not possible for us to...

Okay. And does it continue the same growth in Q1 of this year?

It is -- like we explained even in the earlier question, it is higher than what we had envisaged.

The next question is from the line of Mayur Parkeria from Wealth Managers India Private Limited.

Before I go to the questions, one congratulation in terms of now participants have started asking you quarterly numbers. So that's a change in the -- from some of the long-term questions and investors, which we were seeing earlier. So now there's a lot of interest. So congratulations on that narrative. On the question side, sir, I had a specific question on Nutralite. Our bigger competitors in terms of -- one of the biggest competitors has been struggling significantly as far as the milk sourcing is concerned as far as -- because of the dairy -- on the dairy side for quite some time. What is our sourcing strategy for -- from that perspective, given that now we have launched cheese and other ghee and butter -- means other -- sorry, not ghee and butter, but other dairy products, which we are looking at. So what is our sourcing strategy on the milk side? That is first. And secondly, again, on the Nutralite, but I'll ask after your response, sir.

So for Nutralite, there are 2 parts which play out. One is, of course, the traditional fat spread margarine and then mayonnaise business, which is an oil-based product, where we continue to work with large oil suppliers, and we are able -- we have good working relationship with them from a sourcing strategy, and we do publish directional rates and -- which follows the global rate charts. Talking about dairy, we are largely focused on Western UP dairy sourcing, which is based out of our Aligarh plant, which has a history dating back to 1959 when it was started. And we have an own network of societies and farmers who provide milk. And therefore, we've been fairly consistent with them. We've worked and grown with them. So we believe that we have sufficient support from that space. And that is what we'll restrict ourselves to. We are not a big dairy player. We want to be restricted to this space only as of now.

So whatever our internal plans, we don't see sourcing issues coming in our way for the next few years at least. That's the right way to look at?

Yes, we don't see sourcing issues. We do see pricing issues, which come with our dairy -- with any commoditized business. That's it.

Right. Second, on the Nutralite itself is, again, mainly from the -- the reason is -- normally, when there is an elephant in the room like Amul, which is there on that side, it becomes very difficult for -- to create a right-to-win strategy, especially when they are so agile and so successful across the categories. What is our thought process in that side and from that perspective from one is -- one was from sourcing, the other is from the marketing side and the product side. When there's a player -- and there are multiple players, others also, but it's a large one. So what is our overall strategy to right-to-win over the next 3 years, it can lay out?

Let me put it 3 or 4 things very quickly. One, I think the market is very large. And therefore, one large player is not -- doesn't perturb us. Secondly, Nutralite has stood for healthier alternative to the core. And each of our products clearly differentiates on some differentiated offering like recent launches, the butter we have launched with a probiotic butter where there is a probiotic added. In mayonnaise we've added some vitamin fortification. So we're quite focused that we provide high-quality products, formulated with health in mind, strong marketing and sales capability, and there is room for multiple players. That should take care of us.

The next question is from the line of Jaymin from ARDEKO Asset Management.

Congratulations, Tarun, on a strong set of execution in a challenging external environment. I just have one question. Could you elaborate on key insights or strategic [indiscernible] that emerge from the consultancy engagement, especially concerning to the HFD category when Complan continues to underperform like 6% market share from acquisition base to currently 4%. And on that follow-up, I mean, how do you look at the opportunity cost in terms of the management bandwidth as well as the innovation capital? And at which point of time would you like to draw a line and dramatically alter the strategy? Or at work, I mean, get an exit from this category and double down on categories where you have clear right-to-win and expand those categories?

So I think there are 2 or 3 ways to look at it. Our market share has moved from 5%, 5.5% from June '19 when we acquired numbers to June '25, if we were to look at. So it's about a percentage point reported by Nielsen. Our own read is because Nielsen doesn't cover e-commerce, where we have slightly higher than Nielsen reported shares, so our real blended share is better than what we report publicly because it's not public data, I cannot share it with you. Having said that, I think it's largely got to do with the category challenge. We believe that there is opportunity still in the nutrition space. And how do we find relevance for our brand in the new world, which where there is a struggle for HFD category, but Complan can still thrive by charging a premium by offering superior products and launching products relevant for the consumers -- for the new age consumer will be the only way to do it. If that works and it plays out, I think we should be sorted. If it doesn't, then we'll have to do some strategic call at some point of time in the next couple of years.

Ladies and gentlemen, this was the last question. I now hand the conference over to the management for the closing comments. Thank you, and over to you, sir.

Thank you, everyone, for the interest shown in asking us some insightful questions on Zydus Wellness. I hope you have good health and good season ahead. Thank you very much, and we will reconnect after the results of next quarter. Thank you.

On behalf of Zydus Wellness Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.