FMCG Sector Midcap Stock To Buy For Robust 43% Return, Says Chola Wealth Direct

Chola Wealth Direct has come up with a "Buy" on Zydus Wellness Lld. (ZWL), a midcap FMCG sector stock. With a "Buy", the brokerage has assigned a target price of Rs 1,821 apiece to the stock. With the estimated target price, the stock is likely to give up to 43% strong return. ZWL operates as an integrated consumer Company. The product portfolio of the Company includes brands like Sugarfree, Everyuth and Nutrilite. It has a market capitalisation of Rs 9,369.83 Crore.

Stock Outlook and Performance Over The Past 5-Years

On Friday, the stock last traded at Rs 1,472.50 apiece, up 0.12% from its previous close. The stock recorded its 52 week low on 2 February 2023 at Rs 1,370.10 apiece and 52 week high on 2 May 2022 at Rs 1,814 apiece, respectively.

In a week, the stock fell 2.79%, however, it gained 1.46% in 1 month. It fell 7.49% in 3 months. It fell 1.68% in 1 year. In the past 3 years, it gained 11.85% and in 5 years, it gained 20.18%, respectively.

Buy the stock with a target price of Rs 1,821/share

According to the Chola Wealth Direct, ZWL's margins were affected due to high inflation in key raw materials such as Milk (up 25% YoY), DMH (up 17% YoY) and Asparteme (up 65% YoY). "We expect ZWL's product portfolio to stage a strong comeback in CY24 due to its intense focus on new launches, high A&P spends and improvement in distribution. ZWL trades at an attractive valuation of 29x on FY23E and 24x on FY24E earnings. We reiterate our BUY rating on the stock with a TP of INR1821/share, implying an upside of 23%," the brokerage hass said.

About - Zydus Wellness Ltd. (ZWL)

Zydus Wellness (ZWL) is one of the FMCG companies present in healthcare, nutrition & related products. The company has six brands i.e. Sugarfree, Complan, Glucon-D, Nycil, Everyuth & Nutrilite. It commands dominant market share in sugar substitute (95.8%), Prickly heat powder (35.1%) & Glucose powder (59.9%) categories. The company has more than 850 distributors with direct reach of 6 lakh retail outlets. Its high gross margins at ~55% give it leeway to spend ~13% of sales on advertisement to support new products.

Disclaimer

The stock has been picked from the brokerage report of Chola Wealth Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.