Zota Healthcare: A Quarter of Robust Growth and Strategic Expansion

Zota Healthcare Limited has delivered a strong performance in Q2 FY26, showcasing significant growth driven by its Davaindia generic pharmacy chain and strategic expansion initiatives. The company reported a consolidated revenue from operations of INR 128.95 crore, marking an impressive 92% year-on-year increase. Gross profit surged by 112% year-on-year to INR 76.50 crore, reflecting improved scale and efficiency. Notably, EBITDA turned positive for the second consecutive quarter, reaching INR 7.96 crore, a substantial improvement from a loss of INR 0.32 crore in the same period last year. This performance underscores the strength of Zota's operating model and disciplined cost management.

Davaindia continues to be the primary growth engine, contributing 74% to the consolidated revenue. The domestic operations accounted for 14%, exports for 8%, and the Everyday Herbal Group for 4%. The company's aggressive store expansion strategy has been pivotal, with the total store count reaching 2,055 outlets as of September 30, 2025. This includes 1,207 Company-Owned Company-Operated (COCO) stores and 848 Franchisee-Owned Franchisee-Operated (FOFO) stores. The rapid expansion, particularly in the COCO format, is not just about scale but about deepening access to affordable, quality generic medicines across India.

Financial Highlights (Q2 FY26 Consolidated)

Strategic Initiatives and Operational Excellence

Zota Healthcare's strategic moves extend beyond store expansion. The company has approved a fund-raising proposal of up to INR 500 crore through a Qualified Institutional Placement (QIP) to accelerate store expansion and enhance business scalability. This capital is expected to support growth for the next 18-24 months. Furthermore, Zota increased its stake in Everyday Herbal Beauty Care Pvt. Ltd. by 9.98%, bringing its total holding to 65.98%. This backward integration strengthens the supply chain and expands the product portfolio in the high-revenue over-the-counter (OTC) category, leveraging the well-known 'Khadi' mark.

Customer engagement remains robust, with quarterly footfalls at COCO stores increasing to 29.6 lakh from 11.8 lakh in Q2 FY25. The company boasts an 80% repeat customer base, indicating strong satisfaction and loyalty. To further enhance brand visibility and credibility, Zota has onboarded Mr. M.S. Dhoni as a brand ambassador for Davaindia, joining Mr. Suniel Shetty. The company has also implemented a hyperlocal e-commerce model for on-demand medicine delivery, utilizing its COCO outlets as fulfilment centres for efficient order processing and doorstep delivery.

Segmental Performance and Future Outlook

Zota Healthcare is also focusing on strengthening its supply chain infrastructure. A state-of-the-art central warehousing and processing center has been built in Surat, with plans to replicate this across different zones. This initiative aims to improve efficiency, reduce storage costs, and minimize wastage. The management remains optimistic about its growth trajectory, emphasizing sustainable expansion and operational excellence per store. While acknowledging the negative consolidated net profit, the management clarified that the standalone entity is profitable, and the consolidated figures are impacted by other factors. They expect cash burn to remain stable for the next two to three quarters, with more stores reaching the INR 10 lakh monthly revenue mark within 2-3 years.

Zota Healthcare Limited's Q2 FY26 performance reflects a company in a dynamic growth phase, strategically expanding its footprint and enhancing its brand. The focus on affordable generic medicines, coupled with robust operational execution and celebrity endorsements, positions Zota for continued progress in the Indian healthcare retail space. The management's commitment to disciplined expansion and efficiency underscores a confident outlook for the future.