Buy Zydus Lifesciences Ltd For the Target Rs.1,240 by Choice Broking Ltd
ZYDUSLIF beats estimates on all fronts, US revenue sees robust growth
* Revenue grew by 17.0% YoY and 0.6% QoQ to INR 52.7 Bn (vs. consensus estimates of INR 52.0 Bn), driven by a robust 30.8% YoY growth in US revenue.
* EBITDA saw a growth of 25.9% YoY but a de-growth of 5.0% QoQ to INR 13.9 Bn. EBITDA margin expanded by 187bps YoY but contracted by 157bps QoQ to 26.3% (vs. consensus estimates of 25.9%).
* Adj. PAT grew by 29.7% YoY and 12.4% QoQ to INR 10.2 Bn, with an Adj. PAT margin of 19.4% (vs. consensus estimates of 17.2%).
New product launches and expansion set to drive growth
Zydus continues to experience robust growth across multiple regions and is expected to maintain this upward trajectory.
* US (41.8% of revenue): Although the company saw a sequential decline due to lower Lenalidomide sales, it recorded strong YoY growth. We expect growth from launches like the 55B2 product portfolio, LiqMeds, and the Sitagliptin franchise.
* India Formulation + Consumer Wellness (41.1% of revenue): The company reported strong volume growth in chronic therapies. We expect continued outperformance of IPM growth, supported by an expanded specialty portfolio and personal care segment growth.
* Europe + Emerging Markets (10.6% of revenue): Strong demand continues in these markets, with future growth expected from market expansion strategies by expanding in Russia & Mexico markets.
ZYDUSLIF Pipeline: Key Trials, GLP-1 Launch, and more
* Usnoflast for Amyotrophic Lateral Sclerosis (ALS): The FDA has approved the Phase 2b trial, and the orphan drug designation grants tax incentives and exclusivity. The overall ALS treatment market in the United States was estimated to be approximately USD 920 Mn in 2023
* Saroglitazar (SARO) Readout: Data anticipated by the end of CY25, with commercialization strategies to be shared after the readout.
* GLP-1 (Semaglutide): Set to be among the first wave of launches in India, featuring a differentiated formulation and device strategy.
* LiqMeds Portfolio: Two significant US launches are scheduled in the near term
View and Valuation:
We’ve marginally raised our FY26/27 EPS estimates by 0.3%/0.7% and upgraded our rating to ‘BUY’ with a target price of INR 1,240, valuing it at a PE multiple of 19x (unchanged). The valuation remains at the lower end of the pharma coverage PE band due to its API + formulation business model, slower US growth from Lenalidomide, and relatively higher US exposure. The strong upcoming pipeline, including Semaglutide, Sitagliptin, and biosimilars, will be key growth drivers.
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
