Motilal Oswal 'bull case' projects 80% upside for this 'consensus buy'; Stock up 11%

Shares of Zydus Wellness Ltd. are set to rise as much as 80% from their current levels, brokerage firm Motilal Oswal projected in its bull case scenario while initiating coverage on the consumer wellness player on Wednesday, December 31.

Brokerage firm Motilal Oswal initiated coverage on the stock with a 'Buy' rating and a price target of ₹575 per share, implying an upside potential of around 35% from Tuesday's closing levels.



The brokerage described Zydus Wellness as a diversified health and nutrition company with annual revenues of around ₹4,000 crore and leadership positions across several consumer wellness categories.

Its core portfolio includes sugar substitutes under Sugar Free, glucose powders such as GluconD, skincare brand Everyuth, functional foods Nutralite, prickly heat powder Nycil, and nutritional beverages like Complan.

Motilal said that the company enjoys dominant positions in its core segments, while recent acquisitions including Naturell, which owns RiteBite Max Protein, and Comfort Click, which houses the VMS portfolio, have helped expand its presence in emerging consumption trends. These include high protein snacking, preventive healthcare and digital first nutrition platforms.

The brokerage mentioned that Zydus Wellness is currently trading at a 30%-35% discount to other FMCG peers, offering one of the most attractive risk reward profiles within the sub ₹15,000 crore market capitalisation consumer space.

It added that the stock's valuation multiple remains low due to muted earnings growth over the past decade, with a 10 year CAGR of about 7%-8%.

However, with stability returning to the core portfolio after the initial integration phase of its acquisitions, and new growth engines gaining traction, Motilal expects a meaningful improvement in earnings growth.

The brokerage has modelled a 14% organic EBITDA CAGR and a 36% consolidated EBITDA CAGR over FY25 to FY28.

Key downside risks, as per the brokerage, include high dependence on seasonality, volatility in input costs, potential underperformance in the health food and drinks category, and rising competitive intensity.

All seven analysts tracking Zydus Wellness currently have a 'Buy' rating on the stock.

Shares of Zydus Wellness Ltd. surged as much as 11% in early trade today. As of the last update, the stock was up 8.71% at ₹460.95. The stock has gained about 7% over the past one month and is up 17% over the last one year.