Zota Health Care in FY26: Davaindia scale-up delivers EBITDA turnaround, but PAT remains under pressure

Zota Health Care Limited closed FY26 with a step-change in scale, driven primarily by its private-label generic pharmacy chain, Davaindia. Consolidated revenue from operations rose to INR 538.66 crore in FY26, up 83.86% year-on-year, as the company expanded its Davaindia footprint aggressively and reported improving traction across store cohorts.

Profitability at the operating line improved meaningfully. Consolidated EBITDA turned positive at INR 25.98 crore in FY26 versus negative INR 3.66 crore in FY25, supported by operating leverage and a richer mix from the Davaindia business. In Q4FY26, EBITDA improved to INR 11.91 crore with a 7.3% margin. However, the company still reported losses at the net level. FY26 PAT was negative INR 74.08 crore, reflecting the weight of depreciation and finance costs that come with a rapidly expanding leased retail network.

Davaindia becomes the centre of gravity

The FY26 revenue mix shows how decisively Davaindia has reshaped Zota’s business profile. The investor presentation indicates Davaindia contributed 77% of FY26 revenue, while domestic operations contributed 13%, exports 6%, and Everyday Herbal around 3%.

On an absolute basis, Davaindia sales increased to INR 417.41 crore in FY26 from INR 186.21 crore in FY25. Management described FY26 as a year of accelerated expansion, adding 997 new Davaindia stores in a single year, including 804 COCO stores and 193 FOFO stores. The network ended March 2026 with 2,579 stores across 23 states and 5 union territories, split into 1,656 COCO stores and 923 FOFO stores.

Alongside revenue, operating activity also scaled sharply. Management stated annual footfalls rose to over 182 lakhs customers in FY26, and the company reported Davaindia GMV of INR 457.06 crore for the year.

Financial snapshot: revenue growth and margin expansion

The consolidated gross profit more than doubled to INR 324.69 crore in FY26, and gross margin expanded by 714 basis points to 60.28%, which management attributed to Davaindia’s private-label model and the integrated manufacturing-to-retail approach.

In Q4FY26, revenue from operations was INR 163.18 crore, with gross margin at 63.5%. Operating profit (post operating expenses) was positive at INR 8.70 crore in Q4FY26, supporting the stronger quarterly EBITDA.

But beneath the EBITDA improvement, the income statement shows why net profitability remains distant. Depreciation was INR 82.45 crore in FY26 and INR 27.01 crore in Q4FY26, pushing EBIT deeper negative. Interest cost was INR 17.36 crore in FY26.

Store economics and the maturity curve

Zota’s disclosures provide a detailed look at operating KPIs at the store format level.

In the COCO format, store count increased from 852 in Q4FY25 to 1,656 in Q4FY26. Quarterly footfall increased from 19.0 lakhs in Q4FY25 to 39.8 lakhs in Q4FY26. Quarterly COCO GMV improved to INR 93.24 crore in Q4FY26. Average wallet spend in COCO stayed in a narrow band, reaching INR 235 in Q4FY26.

For FOFO, store count increased from 730 in Q4FY25 to 923 in Q4FY26. Quarterly footfall increased from 11.9 lakhs to 15.3 lakhs over the same period. Quarterly FOFO GMV reached INR 47.11 crore in Q4FY26, and average wallet spend rose to INR 309.

Management addressed investor questions around apparent flatness in average metrics, explaining that newer stores typically start with lower wallet spend and ramp over time. On the concall, management said stores older than two to three years show average wallet spend in the range of about INR 270 to INR 290.

Same-store sales growth was another key theme. Management stated that mature stores (including cohorts operational prior to FY24) recorded about 24% year-on-year SSG, and for the 54 months plus cohort, normalized SSG was about 17% after adjusting for GST changes. The company also stated that it had not closed a single COCO store in the last one year, while indicating that underperforming older stores, if any, would likely be within roughly 1% to 1.5%.

Capital structure and operating focus heading into FY27

FY26 also included major corporate actions and balance sheet shifts. Management stated the company completed a INR 350 crore QIP in FY26, positioning it as capital to support the expansion journey and strengthen the balance sheet.

The consolidated balance sheet shows a sharp increase in right-of-use assets to INR 224.36 crore as of March 31, 2026 from INR 125.38 crore in the prior year, with corresponding lease liabilities of INR 241.71 crore (non-current plus current). Non-current investments increased to INR 263.88 crore from INR 54.35 crore.

Beyond Davaindia, Zota continued to build its OTC and consumer products presence through Everyday Herbal. The company stated it increased its stake in Everyday Herbal Group to 87.78%, describing it as a backward integration move to strengthen supply chain and product development. The deck also indicates that OTC products make up about 30% of SKUs and references a 27% FY26 OTC revenue contribution, though it does not provide a rupee value for OTC revenue.

On forward strategy, management made two clear directional statements. First, the company plans to moderate the pace of expansion for one or two quarters to focus on store-level profitability and operating efficiency. Second, it reiterated its long-term ambition of reaching 5,000 plus Davaindia stores by FY29.

In Q&A, management also gave an FY27 store addition range, stating it is confident of opening about 500 to 700 stores in FY27, with approximately 100 to 150 stores in FOFO and the remainder in COCO, keeping COCO as the dominant addition format.

Advertising spend was also discussed with specificity. Management stated that advertising spend was about INR 18 crore in FY26 compared with about INR 10.5 crore in FY25, and it expects spend to rise in absolute terms with growth while staying broadly similar as a percentage of sales.

Takeaways from FY26

FY26 shows Zota Health Care transitioning from a multi-vertical pharma player into a retail-led model where Davaindia is the dominant driver of growth and margin expansion. The company’s private-label economics and scale appear to be improving gross profitability and EBITDA, but the income statement also makes clear that the cost structure of a fast-expanding leased store base remains a meaningful drag on net profit.

The next phase, as management describes it, is less about adding stores at maximum speed and more about extracting profitability from the base it has already built. With an articulated FY27 store opening range, a stated focus on efficiency for the next one to two quarters, and a longer-term target of 5,000 plus stores by FY29, the company is positioning FY27 as a year where operating discipline has to catch up with expansion.