Zydus Lifesciences Ltd. share price target

Zydus Lifesciences’ revenue was largely in-line with our estimates. EBITDA missed our estimates due to lower-than-expected gross profit and higher-than-expected other expenses. However, Adj. PAT was in-line with our estimates as EBITDA miss was offset by lower-than-expected tax expenses.

Zydus Lifesciences’ (Zydus) Q3FY25 revenue was in line with our expectations, but lower sales of gRevlimid and gAsacol led to a miss in earnings.

Revenue amounted to Rs. 5,237 crore, reflecting a 20% y-o-y increase but a 16% q-o-q decline,
primarily driven by reduced performance in the Indian consumer wellness segment, US
formulations and API business.

Zydus Lifesceinces’ revenue was largely in-line with our estimate (-2.7%) due to strong growth across geographical segments. However, Adj. PAT missed our estimate due to higher-than-expected depreciation and tax expenses, and lower-than-expected other income.

Zydus LifeSciences (ZYDUSLIF) delivered better-than-expected operational
performance for the quarter. While its revenue grew at a lower rate of 19% YoY (vs. est. of 25%).

Zydus Lifesciences Ltd has partnered with the Central Drug Research Institute (CDRI) to develop an oral
treatment for osteoporosis related to chronic kidney disease (CKD) and postmenopausal conditions, focusing on small-molecule inhibitors of the protein sclerostin.

The growth in revenue from operations was driven by a strong 26.0% Y-o-Y (+22.6% Q-o-Q) growth in the US market to INR 30,929 Mn (estimated: INR 31,846 Mn); It was driven by new launches such as Mirabegron, Zituvimet and volume expansion in the base portfolio as gRevlimid also improved Q-o-Q.

The company met our estimates on revenue front and outperformed by 3%/9% on EBITDA and PAT front for FY24.
The outperformance we believe was on the back of strong show in the US and Emerging and Europe markets, improved products mix, lower input costs, improved gross margins in Consumer Wellness and improved price realizations.

Zydus Lifesciences Ltd. showed an in line market growth for the month of January 2024 for India Pharma Market (IPM) as per All Indian Origin Chemists and Distributors Ltd. (AIOCD) Jan 24 report. While the IPM growth was 9.5% Y-o-Y for the month of January 2024, Zydus Lifesciences clocked in 9.4% Y-o-Y growth for the same period on the back of IPM beating growth in its major therapies such as cardiac (13% of sales) and anti-infective (13% of sales); partially offset by slower than IPM growth in respiratory segment (14% of sales) in January 24.

ZYDUSLIF reported slower revenue growth by 5.8% y-o-y (+3.1% Q-o-Q) to Rs. 45,052 Mn in Q3FY24,
which is slightly or 3.3% below the estimate of Rs. 46,577 Mn. The growth was lower than anticipated due to lower than expected growth in the US, Consumer Wellness and API segments.; partially offset by better than anticipated growth in India and Emerging Market formulation segments.

ZYDUSLIF reported 9.1% y-o-y (-15.0% Q-o-Q) rise in revenue to Rs. 43,688 Mn in Q2FY24., which is 6.7% below the estimates of Rs. 46,837 Mn. The growth was lower than anticipated due to lower than expected growth in the US, India, and Consumer Wellness segments.; partially offset by better than anticipated growth in APIs and Emerging Market formulation segments.

Zydus’s Q1FY24 performance was boosted by solid traction in the US (up 8.4% QoQ). US benefitted from the ongoing shortages and better sales of gRevlimid while it has started facing competition in gTrokendi XR. India branded biz grew 10% ahead of the market growth of 9%.