Hold Zydus Lifesciences: target of Rs 900 : ICICI Securities

ICICI Securities's research report on Zydus Lifesciences

Zydus Lifesciences’ (Zydus) recent acquisitions in consumer wellness and medtech divisions helped it in driving a beat in Q2FY26 revenue though subdued margins of these businesses and lower revenue of gRevlimid dragged EBITDA margin (down 28bps YoY and 426bps QoQ). Exclusivity in gRevlimid is nearing its end, and a favourable outcome in litigation of Mirabegron in Feb’26 could be crucial. India biz continues to grow in line with market and it is likely to maintain the trend. Integration of medtech and consumer biz may take a toll on margins in near term, though management has retained its EBITDA margin guidance of ~26% for FY26. Raise FY26/27E earnings by ~2-3% to factor higher sales from recent acqusitions. Retain HOLD with lower TP of INR 900, based on 22x FY27E earnings.

Outlook

We raise FY26/27E earnings by ~2-3% to factor higher sales from recent acquisitions. At CMP, the stock trades at valuations of 22.6x FY27E and 20.9x FY28E earnings, and EV/EBITDA of 12.9x FY27E and 11.5x FY28E. Maintain HOLD with a revised target price of INR 900 (earlier INR 910), based on 22x FY27E EPS (unchanged).