Accumulate Zydus Lifesciences; target of Rs 1020: Prabhudas Lilladher

Prabhudas Lilladher's research report on Zydus Lifesciences

Zydus Lifesciences (ZYDUSLIF) Q2 EBITDA was largely in line with our estimates. We believe base business remains steady with mild erosion; gRevlimid volumes likely to further tapering off. Though, company is working on a robust pipeline of complex products, including injectables, 505(b)2, transdermals, NCE, biosimilars and vaccines, they are expected to materialize over the next 2–3 years. We expect US sales to decline in FY27E given sales erosion in some of key products and thereby expect 7% EPS CAGR decline over FY25-27E. Mgmt have guided for 2-3 high value launches over FY27E/28E, timely launch will be key to sustaining momentum in US sales. Our FY27/28E EPS stands increased by 3%.

Outlook

We maintain our ‘Accumulate’ rating with TP of Rs1,020, valuing at 23x Sept 2027E EPS.