Zydus Wellness (NSE:ZYDUSWELL) Q2 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to Zydus Wellness Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashutosh Sotinarithya from ICIC Securities. Thank you, and over to you, sir. Thank you. Hello, and good afternoon, everyone present on the call. I, on behalf of ICICI Securities, welcome you on Zydus Wellness Limited's Q2 FY 'twenty seven Earnings Call.

0:48 I would like to thank the management for giving this opportunity of hosting the call to us. From the management, we have Mr. Ganesh Nayak, nonexecutive director Mr. Tarun Arora, CEO and Mr. Umesh Parikh, CFO. I'll now hand the call over to the management for their opening remarks. Thank you, and over to you, sir. Thank you, and good evening, everyone. Welcome to the post results teleconference of Zydus Wellness Limited for quarter two financial year two thousand twenty six twenty seven. I have with me mister Ganesh Nayak, director, and mister Omesh Parekh, CFO, on the call from our side. During the quarter, amid the high inflation, largely driven by commodities, consumption trends continue to reflect sustained positive momentum across categories, supported by a steady recovery in demand and an improvement in rural offline markets.

1:51 The gradual improvement in consumer demand coupled with consistent performance across categories supported overall growth. E commerce and quick commerce continue to maintain strong momentum, steadily increasing their contribution to overall sales and further strengthening their role in the evolving consumption landscape. Innovation remains a key growth driver with a focus on emerging consumer needs, new consumption occasions, and differentiated offerings. During the quarter, key launches included Sugarfree entered monk fruit monk fruit sweetener category with a non erythritol formulation. Bright Bite Max Protein Crunchy Cookies feature... Featuring 10 gram of protein made without palm oil, medal, or any added sugar.

2:39 And, of course, continued portfolio expansion in the Comfort Click business through a bunch of vitamin b complex, omega three triglycerides, and vitamin b three and k two under the weight hold brand. Take you through the key highlights of the quarter and half year ending September to... 09/30/2026. On the financial front, for quarter two financial year 2027, the company reported consolidated net sales of 11,227 million, reflecting a growth of 74.6% year on year. On a half year basis, the company reported net sales of Indian rupees 25,526 million, reflecting 70.1% growth year on year.

3:33 With regards to revenue performance snapshot, domestic portfolio delivered robust growth of 29.2% on year on year basis during the quarter, of which seasonal brands grew by one twenty three point five percent on a low base. Skin and hair care brands continued its growth momentum with 37 and a half percent growth, and food and nutrition delivered a strong growth of 25.1%. On a half year basis, domestic portfolio registered growth of 13.3 in which skin and hair care grew by 35.8%. Food and nutrition grew by 20.7%, while seasonal brands degrew by 8.7%. International business registered like to like growth of 12.4% during this quarter and 18.6 in the first half of financial year two thousand twenty seven.

4:27 Gross margin expansion continued in the core business and was further higher margin of the ComfortLink business. On the EBITDA front, the company delivered growth of 271.7% during the quarter, reaching rupees 855,000,000 rupees. The results underscore robust EBITDA margin improvement across businesses, resulting in EBITDA expansion on a like to like basis. On half year basis, company registered an EBITDA growth of 83.2%, reaching to 3,272 million rupees. Detailed brand performance and market share developments are covered in the investor presentation.

5:19 Key highlights for the quarter are as follows. Continued to deliver targeted growth led by the tan removal and peel off franchises. The brand continued to strengthen its position in facial cleansing with significant market share improvement supported by innovation and consumer acquisition initiatives. Nutline delivered strong double digit growth across the portfolio despite commodity headwinds. Sugar free brand replicated replicated its double digit growth performance from the previous quarters and the current quarter. RightWhite Max Protein sustained its strong growth trajectory, reinforcing its leadership in protein stacking through innovation led category expansion and strong value and volume growth. Cuticleur has been increasingly witnessing strong uptake, achieving positive consumer feedback across organized channels.

6:12 During the quarter, the brand expanded its portfolio with the launch of Bright Brown, further stranding... Strengthening its differentiated proposition in the safer hair color segment. Complan registered double digit growth of... Outperforming the category trend. Compliant nitrile grades maintained strong growth momentum supported by direct supply through newly set up on medical marketing team. We remain focused on driving innovation, digital transformation, and disciplined growth. A diversified portfolio and expanding market presence position us to deliver sustained... Sustainable growth and further margin expansion. Thank you. We will now begin the q and a session over to the coordinator. Thank you, sir. We will now begin with the question and answer session.

7:11 If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Satish Deshmagh with IIFL Capital. Congrats on a good set of numbers. My first question is with respect to ComfortClick. You see the growth has moderated from 25% last quarter to 12% this quarter.

8:00 So could you explain what drove the slowdown? And what corrective actions are we taking for the growth to come back? And also since the 2Q growth is below the aspirations, which we had set at the time of acquisition, how do you see FY 'twenty seven shaping up for Trunk for Click? So at the overall level, I think there are, you know, normal business cycles that go through. There is a small shift in the, you know, some of the prime day between June and July, which swing the number a little bit. Also, we are seeing, you know, seeing some challenges in one of the markets as we shifted between the old, you know, website to the new website where we lost some momentum, but we're quite hopeful that the double digit growth that we've talked about will continue to move forward. This quarter has been slightly lower than our expectation, but the... Some of the markets have also given us hope that we could build further on this. So we'll have to wait and watch. But at...

9:08 If we really look at moving average level, I think we've seen a consistency of the numbers. First half is at the international business is more than 18%. And therefore, we will take it as as things come, but we remain consistent in our... We offer double digit growth on this business as we stand today. Got it. So my second question is with respect to comp plan. We've delivered a double digit growth this quarter, and we've outpaced the category growth. So can you dig a little deep in what initiatives you've taken in this brand, and how do you see the growth going ahead? So I think we are also generally pleased with our company numbers, the way it played out. But I don't think it's a one quarter performance. We've been able to do a positive momentum on comp plan for the last three quarters, and we are hopeful that we'll be able to maintain because this category has been under pressure generally.

10:11 But last three quarters have given us hope that most of our initiatives will work. To name few... I think the fact that we've got very good celebrity who fits in very well,, And some of the, you know, campaigns that we work with him have had a very good response from the consumer. Last quarter, we've also launched 50% lower sugar. I mean, we relaunched with 50% less sugar. Also relaunched offline Mutigro, which is a two to six year toddler initiative. Some of these things plus some of the ongoing work and distribution and other pieces, all have come together and have given us now three quarters of continued momentum. So fingers crossed, we'll continue to keep executing the way we have and hope that the momentum will continue to build on it.

11:04 Got it. Thanks, all the best. Thank you. The next question comes from the line of Ronak Shah with Equator Securities. Please go ahead. Thanks for the opportunity, sir. So my first question is on the skin and hair care. So whether we see from the second quarter or the first half perspective, very stellar show, 35% plus sort of growth rate. So what is driving this kind of the growth ex of the beauty color, how the heavy duty shaping? Can you highlight on that front? So I think while we don't give a brand to brand separate performance, I can tell you that every u three has been a brand which over the last five, seven years has seen a very consistent high double digit growth and really move the needle in especially the spaces which are strength areas where it is not just gaining market share, but focused on category growth. Right? And that's really what has driven the whole numbers, whether you look at, even the new proposition, which is really built up meaningfully in this four to five years.

12:11 Each one has contributed, and we do believe that it'll continue to be good driver for significant double digit momentum on the business. Got it. So my second question is on the right price. So when we see to the now number of the players plus players are also coming into the function of food play with healthy snacking and all. So despite all this, we are seeing sustained strong growth rate into the right bite. So can you highlight a few initiatives which we have taken last two, three months to sustain the growth? And how we are seeing the business shaping up considering the sizable contribution now coming from this franchise? So all I can say is that, you know, this is a space where... Which is, you're right, attracting a lot of attention and a lot of new players are coming in and investing big money. And there are larger players who are getting interested in this as the category grows.

13:12 We have focused on the basics. We are not losing sight of the fact that we have to execute every day on the fundamentals. So we are... At at the first level, we are somebody who's in hunger for growth, not discounting, which keeps us focused on our business being built sustainably, profitably. Secondly, I think we've focused a lot of energies around sales and marketing to build this right where our brand building efforts and decision across channels, omnichannel. I think they are working very well where we would also... That this business to be supporting this, not necessarily just making a larger distribution, but the right outlets, right channels. And last, I'm waiting at a very fast pace where we are not seeing that how do I get into the category, but how do I keep adding more products to the franchise based on what consumer is wanting.

14:11 These things come together and help us build it in the right direction. Got it. Got it. So my last question is on the profitability. So now when you are highlighting in your opening remarks wherein the macro challenges includes your inflationary environment, and we are likely to have a overlapping base of the ComfortLink acquisition. So from the near to medium term perspective, how we are expecting our operating margins to perform? And specifically, the mid- long term perspective, wherein we are referring like mid- to high teens sort of EBITDA margin, how much we are confident considering the current volatile macros? So as so as far as... Let me start with the gross margin. I think I'll first start with the core business because that's really is where the... A lot of work has to happen in terms of ensuring those margins. So when I really look at half year one between the two quarters, despite significant inflationary situations and the commodity moving up, we've been able to increase our gross margin product by product.

15:18 It would have been... The outcomes would have been sweeter if our, you know, mix was more positive with the summer products, which are even higher than our average numbers. But the fact is that we've been able to do that. So our focus is that if the input costs go up, we would pass on some of these. We have a pricing part across our brand portfolio, and we'll pass on these. Sometimes there could be a lag because we don't lead with the price increases. We lead with what is right for the consumer and wherever there is a opt... The need for passing on, we do it. So sometimes there could be a lag, but essentially, we will continue to manage our portfolio in a way that we remain profitable and keep moving our margins up. So gross margins will continue to be driven up in our core core core portfolio As far as RightBite is concerned that anyway...

16:10 I'm sorry. ComfortClick is concerned, that's significantly higher than our core portfolio. So core portfolio including RightBite is clearly moving up the margins on a quarter quarter basis is what we will continue to look at. How does it impact our EBITDA margins? I think we are looking at, you know, core business to improve our EBITDA margins through gross margin improvement, which I already explained here, and operating leverage as we scale up. I think this scaling up the last quarter being a significant growth driver has... Gives us opportunity to be able to to provide operating leverage to the business where our fixed costs do not necessarily go up in sync with our, you know, our top line, and that will give us a improvement in EBITDA margin. So from a medium term perspective, I'm quite confident that despite inflation, we will be able to move the EBITDA margins as desired, and we've talked in detail in the past.

17:14 I don't see a big risk. I'm more worried about inflation. A continued inflation could impact consumer confidence and reduce the consumption, which right now in the environment looks good. If that impacts, that has a differential impact. So I'm more worried about that, but our actions are in place to keep moving the margins up. Very detailed and clear, sir. That's it from my side. Thank you, sir. Thank you. The next question comes from the line of Kinjal Mota with Banned Tree Advisors. Please go ahead. Thank you for the opportunity. My first question is on ComfortClick's growth. While you alluded it... While you alluded to it that there was a shift in one of the...

18:07 There was challenge in one of the market, I wanted to understand that ComfortClick majority of revenue comes from marketplace like Amazon. Is there any slowdown on Amazon as well? So, yes, one or two markets have seen slowdown in Amazon, but those are, like, temporary ones. At the overall level, we do... Don't expect a significant shift because the opportunity for business to move towards online is much higher because we are really talking and we've given this number couple... You know, last year when we bought the business. More than 11,000,000,000 is estimated to be a VMS market in our, you know, address market in Europe. And there is opportunity for us. A lot of it to move online.

18:56 So we remain steadfast in our view that the business will keep shifting more online. So some bit of... Some markets have seen a little bit of slowdown in Amazon, but that may be a temporary thing. It it is not a systemic number. So I I believe that will continue to build up. The good thing is we are now also moving on to other platforms, other marketplaces like booths. There is couple of other ones, which we've also listed ourselves. While they are not as large as Amazon, but they give us a good cover for... And growth opportunity as we went forward. Got it. Thank you. My second question is on seasonal brands, which grew by almost one... 20% in in in the current quarter.

19:51 But if you were to look at half year's number, they're still down at 8.7%. If you were to look at h one f r twenty seven, could you compare glu... Glucon d and niacin with f y twenty five, which was a normal summary year for us? So I can't give you any specific Duvalon D numbers, but I can tell you that, yes, the fact is that... I I take out two things. One, of course, the quarter one of a financial year. Quarter four and quarter one are the big quarters for the summer brands. And if I really look at FY '27, quarter one was really impacted significantly because of summers, and that's why half year one still stays negative.

20:41 The two takeouts that I would want you to look at is the fact we've always talked about double digit growth for our domestic business. This year is first year where our summer brands have had a struggle in the quarter one, but half year one has delivered a double digit growth in... For domestic business at 13 plus... Percent plus. So that's... Based the fact that while we will have ups and downs, cyclical impact of summer brands, but our business is becoming immune to seasonality. I mean, it's a good thing, you know, because a lot of concerns come back. When I look at summer brands in specific that you asked, I think while I do not have a specific ready number from FY twenty five, but the fact is that like for like, we are seeing a good momentum moving up, especially in quarter two.

21:36 We hope that we can build it further, but I can't give you a specifics on detail. Yeah. Sure. And my last question is, we have seen gross margin improvements and that continues. But we also continue to invest back in the business in terms of advertisement. Wanted to understand what should be the steady state a and b as a percentage of sales that we should target for a longer term? And when do you expect it to start slowing down? So the way I look at it, we we managed our email where our domestic business spends about 12 and a half to 13% on a and b.

22:23 And company typically spends about 23%, 23, 24% on E and P. And that's a, I think, a very disciplined trend that we will continue to build on. In domestic business, which is where we are leaders, we have to build the category, and therefore, the task is to build the category that also helps us grow our business. And therefore, I do believe that this is a model which we want to retain. We will look at gross margin enhancement and other operating leverage to improve our EBITDA margin rather than to cut the investments on marketing because this is important for a consumer acquisition space. So in short to medium term, I think we'll remain consistent about 12 to 13%, half a percent. Anyway, anytime we have an opportunity, we'll take out, but not a significant shift.

23:16 As soon as ComfortClick investments on marketing are concerned, they operate at 23 to 24. They are more variable because it's a lot of performance marketing and as well as some middle of the funnel marketing. But they're also... Part of it is very disciplined in terms of percentage to sales, and we looked at some optimization in last one year, and that's really helped us. So we will continue to maintain the same mix for each of these Thank you so much. That's all from my side. Yeah. Thank you. The next question comes from the line of Shivran Kumari with Financial Services. Please go ahead.

24:04 Hi, Shivran. Are you good? Yes. Thanks for the opportunity. My question is specifically regarding the margin. Could you just provide the margin outlook for the RiseBite as well as Comfort during this quarter? And just say... Sorry? Yeah. Go on, please. And the strategy and target for the maintaining this both for the coming years? Hello? Yeah. You you want to grow the margin for quarter two?

24:55 How come you can ComfortClick as well as RightWide two four group and the outlook for the same for the coming year. So we don't share individual brand or business wise margins. Okay. Like, I just wanted to get an idea, like, how much our core business has contributed this quarter. Is there a... And what kind of pricing that we pass on this quarter? Like, as you said, see, there was huge inflation during this quarter. So I just want to get an idea what was the pricing we took in this quarter. So so let me just give you something which we have said in the earlier calls.

25:42 Our EBITDA margins for ComfortFleet, we expect between 1415%, and that's a plan or or that's the steady state that we are in this house. Anything else, we are not able to share. As far as the... This quarter is concerned, we've taken some calibrated price increases wherever they were direct impacts on those products so that our profitability, our gross margins are predicted, and therefore, we've been able to deliver. There is work at hand because some costs are going up as we speak and will... Could make it impact in future. So we are already, you know, looking at how do we manage those price increases. But looking at margins, you will not be able to separate out the price increases anyways.

26:35 Is there any plan for further price increase during this quarter, like, three q by '27? Over half year two, yes, we will take calibrated price increases like I mentioned, depending on what commodity is going up. And because it's a very volatile environment and different commodities are going up in a different way, like, we've seen some stabilization on palm oil. So may not need to act on that immediately. But if milk or something else goes up, we will respond according to your PD or any plastics work. So we'll respond accordingly. But, I mean, like, you would know that it's a volatile environment and very hard to predict. So we are tracking individually...

27:20 Individual commodities and acting accordingly. So we will take some price increases, but it's not across the portfolio. Thank you so much for the answer. And the... My second question is regarding the same ride by portfolio. Like, what was our revenue outlook for this ride by portfolio? So we do not give our individual product portfolio wise answer, but I I think, like, we maintain, We have more than doubled our historical growth rates on this product and exceeded those estimates is all I can say. Okay. Thank you so much, sir. Those are my questions.

28:10 Thank you. The next question comes from the line of Ajay Thakur with Arundhati Securities. Please go ahead. Hi. Am I audible? Yes. Thanks for taking my question. So first question was more on the EverYouth. Like, the earlier participants, had to kind of check out on every year's growth. I want get more sense because we are going ahead of the category growth rates. So are we creating, you know, market share in these subsegments and also the overall facial segment if you were to kind of look at it from that perspective. So maybe more color on the revenue growth, what is kind of driving will help us, you know, understand the sustainability of this growth given the fact that it has been going at a very fast pace over the last many quarters now.

29:02 So that's the first question. Yeah. Okay. So so on every youth, you're right. We are growing faster than the category, and we've been... So we define facial cleansing with face wash, scrubs, three types of mask, peel off mask, sheet mask, and wash off mask, etcetera. So all facial cleansing products, which is close to about 4,500 pro category, we've been gaining share about few years back. We used to be number seven, then we became number five in the space. We have now, this year, become number four. So we are actually gaining share and rank in this space. So each of these initiatives that are, you know, we've been taking is adding up to our momentum on this.

29:49 So you're right. It has helped us improve market share and rank in our... In this overall efficient cleaning category. And is it, like, any specific market for... Or that you're targeting which is helping us grow in revenue? Or is this, like, broad based or any segments which is kind of a surprise in terms of the upside? Any, you know, new launches which has performed way better than our expectations for every year specifically? So so it's a broad based growth, and it has come over the years. I think it is a validation of our strategy of con... Continuous investment behind category building, which is really helping us move this forward. So it is not about just that we've got something windfall one one year off, but I think year after year, our focus on investing behind developing the segments that we play in, premiumizing, innovating, launching new products, expanding our portfolio.

30:50 I think each of our actions have come together, and this is just a validation of our approach. Understood. Helpful. Second question was more on the gross margin. If you were to look at the gross margin concern level, it is slightly lower tracking at, you know, below the 65% kind of a level that we have been doing, say, for the past two quarters on an average basis. It would have been more, like, 65% kind of kind of a level for the past two, three quarters. So... And then, obviously, we have the input cost pressures, which is kind of being done. But but, you know, what kind of, you know, level of gross margins will you be comfortable with? And how are you likely to kind of defend it given the inflationary cost pressures?

31:39 And if you can throw some, like, on the domestic gross margins versus international gross margins as well, which will help in terms of my understanding of product mix over there. Ajay, I can tell you that for half year one, our gross margins individually in the domestic portfolio are mostly are higher. One or two spaces may be same as year earlier. So I can tell you that our gross margins have... For the half year one has only got better than earlier. If you're comparing it to two sequential quarters earlier, the factors quarter four, quarter one tend to be higher margins because of higher seasonal brand mix, which is disproportionate to this quarter. And, therefore, you know, they move the averages much higher. So you may find on a sequential level a gross margin drop, but as a company at the individual level, we continue to track in the right direction.

32:37 So like for like over last year, same quarter, I would... I can assure you that our gross margins are better off. It is that sequentially be... It may look different because like I explained, the seasonal portfolio moves it up. It is much higher than the average domestic gross margins and look on the end. And I feel that, you know, affect the... Impact the averages. So, therefore, we remain focused on the delivery on gross margin on a continuous basis despite the inflation. Understood. Just one just one last question was on the cookies launch that we had under the Max protein. Is it a pan India kind of a launch? And secondly, you know, what channels are we kind of focusing? Does it channel?

33:29 And in terms of the price point, also, if you can share, you know, how it is kind of, you price versus the competition. So so it's a Pan India launch. We are launching both in across channels. It's a omnichannel approach that we follow. We are on online channels. We are launching in offline channels. We we do believe that there is enough and more opportunity on building around it. It's a premium play. So most of the categories you will find us playing to the premium. We are not comparing ourselves with the mass players in the cookies because we really can't do that game. It has product which is built around, you know, the seven super...

34:18 There is a fair amount of protein in the mix. So it'll be significant premium to the mass product. Oh, yes, mister Ajay. Does that answer your question? Yeah. Yeah. Thanks. Thanks, Arun. Thanks, team Thank you. For the answers. Yeah. Thank you. The next question comes from the line of Vinay Shukla with Philip Capital India. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Just on business, so is it possible to share what was the Sorry. I'm not able to hear. Sorry.

35:09 Could you just Can you hear me now? Can you hear me now? Yeah. Yeah. So it was on seasonal disease. I just wanted to know the quantum of impact on growth because of the demand shifted from July to June, and also because of its... That said integration to what was the impact on growth in terms of percentage during the quarter? Sorry. I I I could make out the July to June piece. I didn't understand the other piece. I think July to June is a small number. It's not like a big number. But referring to two or three events which happened. One was July July to June Prime Day shift. One was a website shift in one of the country and a general slowdown on market basis in in couple of places. But not a significant number for me to pick up on, probably can't detail it out, but some of those things have contributed to the mix. But if we really look at half year one, we are at 18% growth, and that, I think, is in line with what we expect.

36:16 If there was some part of the second half that you were asking, I could get that. So maybe you could come to the Just on how how was the October money for the business? Is that slowdown still continued in October also, or have you seen some improvement in the business? It's a good question, but we we really do not share the next quarter numbers. Okay. Sir, just just on vision only, what was the contribution is coming from the repeat purchase customer in terms of contribution and secondly, you will launch this contribution for. So what is the contribution coming from? Repeat repeat purchase in CCN?

37:02 No. No. New launches. New launches. I think Yeah. This year, we seem to have a a very good response from the new launches. So I don't have a specific numbers, but we are seeing a sustainance of some of the new launches at a very differential level. So we're quite excited with the possibilities it'll take us through, but I do not... Oh, sorry. 2%? So overall products launched in last three to four years, the numbers will be closer to 4%, but just 2% on the last products launched in last one year will be share of growth. Right? That's Okay.

37:49 Just a second on the seasonal brand. So can you please help us to understand what was the contribution of some of the? Sorry. I... Your voice is... I think I missed some of the voice. What is the contribution of summer portfolio too? Summer portfolio contribution during the. So we don't share separate salience of these. We've given you what is the growth for each of these segment. But what was the contribution, we'll not be able to share in specifics. Okay. And third is on Google demand, sir. How things are... Demand is shaping out in Google demand? Do you see any kind of slowdown in terms of sentiment in Google market, or is it still resilient for you?

38:42 So rural demand continues to be robust. While we have slightly... Significantly lower than larger FMCGs in terms of rural portfolio, but whatever we have, gluconine, or even a compliant sugar free review, we do see that rural is holding rather well. In fact, growth rates are slightly higher than urban. Okay. Last question was on the total price hikes we have taken so far versus on the case of commodity inflation. So it's a mix bag. Overall value, we may not be able to share, but but the fact is that we have taken it on specific products and SQS where we have a direct impact of the cost of...

39:35 From the cost inflation from the input point of view. So I'm keen to know the blended price cycle? Will be about less than couple of percentage. Right? Less than 2%, actually. Commodity inflation will be in in single digit? Yeah. It'll be in single single digits because because some part has obviously... Has been much higher, and we've taken it on. But there are some products like the extrude pose and several other products, which we do annual tie up. So they remain fairly stable through the quarter and the year. Thank you. Answer your question? I I know you quite soon.

40:36 The next question comes from the line of with Wealth Managers. Please go ahead. Good evening, sir, and thank you for taking my questions. Actually, while you I'm sorry to interrupt, Nandan, sir. Could you please use your handset? Hello? Is it okay now? Better. Yeah. Thank you. Yeah. So while you I think it got disconnected. Oh, yes, sir. The current participant has been disconnected. The next question comes from the line of Divan Sarawdi, an individual investor.

41:45 Yes. Sir, my question is on ComfortLink. If ComfortLink growth returns to 20%, can consolidated gross margin get back to 65% range in nonseasonal quarters? So it's a hypothetical question because, I mean, we could do those mixes, but but end of it, I think I think what we've given is fairly... I mean, it'll be in a similar zone. I I mean, I'll have to put a match together and come back to you, but I think this is what it is right now. And second, can we expect growth to normalize from q three for comfort click?

42:35 Any projections in for that business? We believe that we'll continue to be on a double digit growth that we've talked about. And half year one, we have delivered 18%. We do believe that we we will stay on course to get to a double digit for half year two as well. Thank you, sir. Thank you. The next question comes from the line of Nandan Vartak with Wealth Managers. Sorry, my line got dropped off. Am I audible now? Yes.

43:32 Yeah. So, sir, actually, was asking that while you gave an indication that profitability continues to be stable to improving at gross margin levels even for the domestic market. But last year, H2 was very strong in terms of our H2 in terms of our gross margin deliverables. And given the inflationary pressure which we see currently, do you believe that two of this year, we will be able to continue this trend of improving gross margins or or stable to... Stable gross margins even in h two? Or do you believe that the high base effect will have some some impact there? I I do believe that we'll be able to hold on to our gross margin levels. But, of course, it will mean a lot of effort in terms of ensuring that we are managing our costs rather well and taking price increases where... Wherever required.

44:27 So our endeavor is to match or improve gross margins, but only time will tell how well we are able to do because the volatile environment, hard to predict, but our intent and actions is what I can commit to. Right. Great. Great to hear that, sir. So second is on the ComfortClick again. So we have the numbers in terms of a broad directionally, we understand, right? I just to because given one is the seasonality impacts of products and segments which come on the companies, the second is now the we have added international. So there is some it's very difficult to get the complete hang of everything. So just would request you to have some concerns, which if you can be a little more specific on the question I have. Is...

45:18 Sir, we have around 500 crores broadly give and take for a quarterly run rate for ComfortClick. It has been in the last year, and it's 18%, 20% growth segment, which has been, you know, broadly. Combine that, we... You you also indicated that it's a 14, 15% EBITDA margin kind of business, which is there. When we look at the last year of q two, because only one month of ComfortClick was added there, the... When we look at the math in terms of domestic sales being so strong in this quarter of almost 29%, the math actually tells us that ComfortClick would have been actually... The margins would have been in low single digits if if at all. And also the fact that the the the growth on the international side, you just just mentioned like to like, but if we do the numbers after doing that, it would be a very...

46:17 A a bigger impact than what the qualitative indications are. Will it be a fair way that... To say that this is how to... How did the quarter went by? So all I can tell you is that I think margins... ComfortClick is holding rather well. We have given you a reasonable view of ComfortClick's growth, which I think in that sector, you can look at it. As far as domestic business is concerned, we've we've grown our business, like, like,. Gross margins have also improved, but we've also entered back on the business. And that also has an impact on the overall bottom line.

47:05 Overall, we balance our bottom lines between both domestic and international where we are focused on building growth and preparing for the growth. And those things have been balanced, and that's how we've been able to deliver what we wanted. So, sir, completely gonna like to like this is also... Could have seen some pressure on the margin this quarter is what I get it. That's what I... Like like I explained, not really. They've been consistent. Okay. And we've invested also on brand building in the domestic business. Okay. Great. Sir, we'll do the numbers again and come back in. Thank you so much. Thank you.

47:52 Thank you. The next question comes from the line of Chairman with Asset Management. Please go ahead. Yeah. Hi, sir. Thanks for taking my question. Two questions on the company. We're not able to hear you clearly. There is Can you hear me? Not clearly. Hello? Am I audible? Hello? Better. So, sir, there's been a weird thing that unfortunately, it's not clear. It's not clear. Sir, could you please use your handset and come in a better network carrier? The voice is getting cut off in between. Am I audible now? Yes. So, sir, it's been a year since the company acquisition, and we understand integration by fees. I mean, normally, fuel surprises.

48:43 So while looking back, are you surprised by underlying the seasonality of the sales or the competitive intensity in the coal market? Sorry. Are we surprised by by what? Underlying seasonality of the sales or the competitive intensity in your core markets? For ComfortClick? ComfortClick. Right. Yeah. So I think I I think when we look at Comfort Lake and... You're right. It's been a year. There has been a higher intensity than we did imagine, but that's okay. That's expected because when you do well and when you actually set a path in this kind of space, some of those competition is pretty much expected and that's playing out.

49:31 That's not so much a problem. A little bit of highs and lows happens across market to some bit of. I think we've we've watching and I think not a big surprise. We we obviously remain very optimistic about these businesses. And when I look at first half year growth, it's in line with double digit growth that we envisaged. It's we just see how it plays out in the future quarters and then decide if there's any surprises or if there are any different takes on this. Understood, sir. And, sir, given the size and the opportunity size of the VNS market and the link fragmented nature of the industry, how are we thinking about stepping up the marketing spend at the comfort you could gain the market share in key of the marketplace?

50:18 So so one of the things we are doing is... And we we do... The team understands it rather well. They're very good with performance marketing and bottom of funnel. We are stepping up our investments on the middle funnel and top funnel spaces. We're also looking at some markets where we will build it a bit differently. So we are preparing ourselves for the future where we will see a lot more competition, but we've also enhanced some of our capabilities on more brand building. And I think we're well prepared to take on the future growth from that agenda as the market expands, we want to play in the larger space. And more players come. Yeah. But that's the... That's that's the thing from my side. Thank you so much.

51:06 Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Thank you, everyone. Wishing you and your family as a festival filled with good health, happiness, well-being, and safety. We'll see you next quarter. Thank you. Thank you, sir. On behalf of ICIC Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you.