KR Choksey's research report on Zydus Lifesciences
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. We maintain our FY26E EPS estimates of INR 52.3 as we believe the company’s focus on chronic and specialty therapies, and high-value product launches in key markets position it well for sustained growth. We expect the revenue to grow at 16.6% CAGR and Adj. PAT to grow at 16.1% CAGR for FY24-FY26E, respectively. We reduce the PE multiple to 23.0x (previously: 27.5x) due to litigation concerning Mirabegron, regulatory challenges such as a warning letter from the US FDA for its injectable facility, and competition in the US market for Asacol HD.
Outlook
Therefore, we arrive at a target price of INR 1,201 (previously: INR 1,439) and maintain our “BUY” rating on the stock.
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