Neutral Zydus LifeSciences; target of Rs 1010: Motilal Oswal

Motilal Oswal recommended Neutral rating on Zydus LifeSciences with a target price of Rs 1010 in its research report dated November 12, 2024.

Broker Research

November 14, 2024 / 17:13 IST

Neutral

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Zydus LifeSciences

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%), improved traction in the US and other international markets resulted in better-than-expected margins for 2QFY25. We raise our earnings by 3%/4%/3% for FY25E/FY26E/FY27E to factor in: 1) superior execution in international markets, and 2) controlled opex, partly offset by increased competition in g-Asacol and higher effective tax rates. We value ZYDUSLIF at 22x 12M forward earnings to arrive at our TP of INR1,010. While ZYDUSLIF is implementing efforts to add differentiated products across focus markets and improve growth visibility in the domestic formulations market through increased share of chronic categories, we expect earnings to remain stable over FY25-27. This is due to reduced scope of business in products such as g-Revlimid (from 4QFY26) and g-Asacol. We reiterate our Neutral rating on the stock as the current valuation factors in stable earnings over the next two years.

Outlook

We raise our earnings by 3%/4%/3% for FY25E/FY26E/FY27E to factor in: 1) superior execution in international markets, and 2) controlled opex, partly offset by increased competition in g-Asacol and higher effective tax rates. We value ZYDUSLIF at 22x 12M forward earnings to arrive at our TP of INR1,010.

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