Hold Zydus Lifesciences; target of Rs 480: ICICI Direct

ICICI Direct's research report on Zydus Lifesciences

Zydus is a leading pharma company with family pedigree having a presence in domestic branded formulations, US generics and is in the process of repurposing itself into niche areas of specialty pharmaceuticals, biosimilars and vaccines. FY22 revenue break-up – US: 39%, India: 32%, Wellness: 13%, Europe & emerging markets including countries in LatAm, Asia Pacific & Africa: 10% • Zydus is the fourth largest pharma company in India with 14 brands among Top 300 pharma brands in India and nine with Rs 100 crore+ sales.

Outlook

We maintain HOLD rating as we wait for 1) consistency from US business in terms of continued traction in base business and new launches momentum (post Moraiya EIR) and 2) continuum in Wellness and India formulations. We value Zydus Lifesciences at Rs 480 (base business of Rs 455 at 18x P/E on FY24E EPS of Rs 25.3 + NPV of Rs 23.5 for gRevlimid opportunity).