Zydus Wellness, a leading Indian FMCG company, has been generating a lot of buzz in the stock market due to the recent volatility in its share price. The rise and fall of the Zydus Wellness share price has created a lot of speculation and interest among investors and analysts, prompting them to wonder what’s driving the volatility. In this article, we will delve deeper into the reasons behind the rise and fall of the Zydus Wellness share price to gain a better understanding of the factors affecting the company’s stock price.
To begin with, let’s take a look at the current state of Zydus Wellness. Zydus Wellness is a part of the Zydus Group, which is one of India’s leading healthcare companies. The company’s portfolio includes well-known brands such as Sugar Free, Nutralite, and Everyuth, which are popular among Indian consumers. Zydus Wellness has a strong distribution network and operates in diverse segments such as functional foods, skincare, and personal care. Despite the pandemic affecting the FMCG sector, Zydus Wellness has managed to post decent financial results in the recent quarters.
However, the company’s share price has been volatile over the last few months. In May 2021, the Zydus Wellness share price reached a 52-week high of Rs. 2541, but in August, it fell to Rs. 1825. What’s causing this volatility? Let’s explore the reasons below.
One of the key reasons for the rise and fall of the Zydus Wellness share price is the market sentiments towards the FMCG sector. As we know, the FMCG sector has been grappling with several issues such as raw material price hike, supply chain disruptions, and a slowdown in demand. These factors have made investors cautious about the sector’s prospects and have resulted in a dip in FMCG stocks.
Another reason for the volatility in Zydus Wellness share price is the company’s financials. While Zydus Wellness has remained profitable, its revenue growth has been adversely impacted due to the pandemic. In FY21, the company’s revenue declined by 12.9% YoY. The company’s margins have also come under pressure due to the increase in input costs. Investors are closely monitoring the company’s financial performance, and any adverse news could impact the share price.
Apart from these external factors, there are some company-specific reasons behind the volatility. In July 2021, the promoters of Zydus Wellness sold over 3.46 million shares, which led to a fall in the share price. The market speculated that the promoters may sell more, which further fuelled the negativity towards the stock.
To conclude, the rise and fall of Zydus Wellness share price is a combination of external and internal factors affecting the FMCG sector. While the company has sound fundamentals, investors are wary of the ongoing pandemic and its impact on the sector. However, with the easing of restrictions and gradual opening up of the economy, the FMCG sector may witness a revival in demand. It remains to be seen how Zydus Wellness performs in the coming quarters and whether the share price bounces back. Investors should keep a careful eye on the company’s financials and industry trends before making any investment decisions.
