/*** blogpostTitle: Zydus Wellness Q4 FY26: Scale-up led by international business, while seasonality hit domestic momentum blogpostSlug: zydus-fy26 */

Zydus Wellness Q4 FY26: Scale-up led by international business, while seasonality hit domestic momentum

Zydus Wellness closed Q4 FY26 with a sharp jump in reported revenue as FY26 numbers captured the impact of recent acquisitions. Net sales for Q4 FY26 came in at 14,761 million rupees (1,476.1 crore), up 62.1 percent year on year, while FY26 net sales reached 39,400 million rupees (3,940.0 crore), up 46.4 percent. The company clarified that FY26 includes the performance of Alidac UK Limited and its subsidiaries for seven months and two days, while FY25 included only four months of the RiteBite Max Protein business.

Profitability showed a split picture. Gross contribution rose strongly with gross margin expanding to 64.8 percent in Q4 FY26 and 60.2 percent for FY26. But EBITDA margin declined to 18.2 percent in Q4 and 12.9 percent for the full year. Reported PAT declined 5.8 percent in Q4 and 43.2 percent for FY26, largely due to amortisation of acquired brands and exceptional items.

Domestic performance was steady but uneven. In Q4 FY26, domestic revenue grew 1.7 percent, supported by strong growth in skin and hair care and continued momentum in food and nutrition. Seasonal brands, however, were a drag. International performance stood out, with the international business delivering like-to-like growth of 31.4 percent in Q4 and 29.5 percent for FY26, with Comfort Click included on a like-to-like basis.

Revenue mix and what moved in FY26

The company disclosed a geographic mix for FY26, with domestic accounting for 67 percent and international for 33 percent, including post acquisition Comfort Click business. Domestic channel mix continued to tilt towards organised channels. Internal MIS data showed organised channel saliency at 30 percent in FY26, up from 24 percent in FY25, driven by premiumisation and growth in modern trade and e-commerce. Modern trade stood at 13 percent and e-commerce at 17 percent.

In the concall, management added a useful datapoint: quick commerce is estimated at 7 to 8 percent of the company’s total business. This matters because multiple growth drivers in the portfolio, particularly protein snacking and better-for-you indulgence, tend to over-index on online discovery and impulse-led purchases.

The domestic portfolio remained split between categories that benefited from innovation and distribution expansion, and categories that were exposed to seasonality.

Notes: Financials are in million rupees in the source document and converted to crore. Adjusted profit adds back amortisation of acquired brands and exceptional items.

Domestic: strong growth engines, but seasonal headwinds persisted

The company’s domestic performance in Q4 FY26 was shaped by sharp divergence between portfolio clusters. Seasonal brands declined 9.8 percent in Q4 and 18.8 percent for FY26. Management attributed the softness to delayed summer and unseasonal rains, especially in North and East India, which are key markets for seasonal products. They also explained that when the season is delayed, channel pipeline build-up does not happen in the typical way, which impacts offtake and secondary sales.

In contrast, skin and hair care grew 39.7 percent in Q4 and 21.9 percent in FY26. Everyuth Naturals delivered strong double-digit growth in FY26, supported by innovation and distribution expansion. The Q4 launch of Tan Removal Face Wash was highlighted as a step that strengthens the brand’s functional skincare proposition. The presentation also cited leadership in niche sub-segments such as scrubs and peel-off masks based on Nielsen MAT Mar 2026.

Food and nutrition also remained a steady growth driver, up 9.4 percent in Q4 and 15.5 percent in FY26. Sugar Free retained category leadership with a 96.1 percent market share (Nielsen and IQVIA MAT Mar 2026), while the company continued expanding the franchise into better-for-you indulgence through the Sugar Free D’Lite range. In the concall, management noted the addition of D’Lite choco spread and said chocolates are witnessing strong growth, led by e-commerce, while cookies are scaling through offline and online channels.

RiteBite Max Protein was positioned as a key long-term growth platform. The company highlighted new category entries including millet wafer protein bars, an RTD product called Ultimate Protein Boost, Max Protein Roots ghee jaggery bars, and Korean-flavoured chips. Management said the business is outperforming expectations and continues to see robust growth on quick commerce supported by distribution expansion.

Complan remained a tougher market story. The company said the category declined 4.8 percent versus last year, but Complan delivered near double-digit growth in the quarter and maintained its fourth rank with around 4.1 percent share. A notable operational change was the commencement of direct supply of Complan NutriGro kids segment, which was previously distributed through the group company.

International: Comfort Click and the shift to an online-first playbook

International revenue growth was the standout theme of the year. The presentation showed international growth of 31.4 percent in Q4 and 29.5 percent in FY26 on a like-to-like basis including Comfort Click. Management described the international business, especially Comfort Click, as a digital-first vitamins, minerals, and supplements portfolio with strong marketplace and D2C presence.

The company highlighted that core markets remain the UK, Germany, France, Spain, and Italy, while expansion is underway into other European markets where presence was limited earlier. The company also described the US and UAE as medium-to-long-term bets. The presentation cited an expansion to Boots.com in the UK for WeightWorld and maxmedix, and a launch on Amazon UAE.

On profitability, management stated that Comfort Click is in line with expectations or slightly exceeded. The CFO also said that the Comfort Click business was EPS accretive in Q4. The company acknowledged a foreign exchange tailwind, noting that the gap between total growth and constant currency growth for Comfort Click was about 3 percent.

Margins and earnings: gross margin strength, but below-the-line charges matter

The most visible improvement in FY26 was gross margin. FY26 gross margin rose to 60.2 percent from 52.5 percent in FY25, supported by portfolio mix and performance of newly acquired brands. Management also pointed to actions across domestic brands to improve margins and rationalise low margin products.

However, EBITDA margin declined in FY26 to 12.9 percent. In the concall, management indicated the operating leverage story remains intact, but the mix impact from weak seasonal brands affected overall profitability because seasonal brands have above-average gross margin and EBITDA contribution.

Below EBITDA, the company highlighted two key drivers that pressured earnings. First, acquisition funding through a bridge loan in GBP that was later refinanced into a euro facility led to finance costs that impacted PBT. Second, amortisation of acquired brands increased sharply. In FY26, amortisation of acquired brands was 1,174 million rupees (117.4 crore), versus 64 million in FY25. Exceptional items in FY26 were 408 million rupees (40.8 crore), linked to one-time impacts from labour code implementation, acquisition-related costs, and liquidation expenses related to Naturell (India) Private Limited.

This is why the adjusted profit view is crucial. Adjusted net profit was 2,087 million rupees in Q4 and 3,554 million rupees for FY26, translating to adjusted EPS of 6.56 for Q4 and 11.17 for FY26.

Cash flow was a watch item. The company’s cash flow from operations declined to 2,264 million rupees in FY26 from 3,800 million in FY25. The presentation showed cash conversion from operations to EBITDA at 44 percent in FY26.

What to watch in FY27

Management entered FY27 stating a clear agenda anchored in innovation, portfolio scale-up, and margin expansion, supported by data-driven and AI-led capabilities. They also reiterated an aspiration to reach 17 to 18 percent EBITDA margin over the next couple of years for the business excluding Comfort Click.

Execution will likely hinge on three variables. The first is seasonal normalisation, because weather-driven volatility has now affected several quarters. The second is the pace of scaling new adjacencies like Recharge in performance hydration and the expanding Max Protein portfolio. The third is how well the company balances operating leverage versus reinvestment in brand building as organised channels and quick commerce increase their share.

The FY26 update showed a company that is scaling rapidly and widening its wellness footprint, but it also highlighted that as the portfolio expands, investors need to separate operating momentum from acquisition-related accounting and financing noise. The next few quarters should provide a clearer view of underlying profitability as the acquired businesses annualise and domestic seasonality stabilises.