India's Zydus Wellness profit drops on one-off deferred tax expense

Bengaluru: Indian consumer good company Zydus Wellness reported a more than 30 per cent drop in second-quarter net profit on Monday due to a one-off deferred tax expense.

The maker of Glucon-D energy drink and Complan health drink, posted a net profit of 59 million rupees ($709,134.62) for the quarter ended Sept. 30, as it flagged a deferred tax of 27 million rupees.

However, it reported a 4.9 per cent rise in profit excluding tax expenses at 86 million rupees.

Analysts had expected gross margins for most consumer good companies to expand year-on-year during the July-September quarter due to a moderation in prices of some raw materials.

The Ahmedabad-based company said its raw materials cost, which includes commodities such as milk, refined palm oil and aspartame, dropped 13.2 per cent to 1.82 billion rupees.

"Commodity rates continues to moderate sequentially during the quarter," said the company, in which generic drugmaker Zydus Lifesciences holds a 58 per cent stake.

Sales marginally rose 2.6 per cent to 4.38 billion rupees due to slow demand recovery in rural markets, which was disrupted by the delayed and erratic monsoon this year.

Zydus added that it made calibrated price hikes across its portfolio to improve gross margins. Gross margin on net sales for the quarter was at 44.9 per cent, 198 basis points higher than a year ago.

Bigger rivals Nestle India and Dabur India beat September quarter profit estimates on higher demand, while ITC missed profit view as it grappled with stiff competition.

Zydus' shares dropped immediately after the results but recovered losses and were trading 2 per cent higher at 1576.7 rupees as of 13:05 p.m. IST.