Neutral Zydus LifeSciences; target of Rs 550: Motilal Oswal

Motilal Oswal recommended Neutral rating on Zydus LifeSciences with a target price of Rs 550 in its research report dated May 18, 2023.

Broker Research

May 23, 2023 / 11:50 IST

Neutral

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Zydus LifeSciences

Zydus Lifesciences (ZYDUSLIF) posted a beat on operational performance in 4QFY23, aided by strong traction in US and consumer healthcare sales. In the domestic formulation (DF) business, sales growth was steady (Ex-Covid basis) and better than industry growth for the quarter. We raise our earnings estimates for FY24/FY25 by 3%/4% to factor in 1) a robust launch pipeline in US generics, including limited competition products (g-Vascepa/transdermals/REMS); 2) increased competition in gTrokendi; and 3) higher R&D spending. We value ZYDUSLIF at 19x 12M forward earnings to arrive at a TP of INR550. We expect a 12% earnings CAGR over FY23-25, led by a 9%/8% sales CAGR in the US/DF segments. While the US pipeline looks interesting over next 12- 15 months, the overall improvement in return ratios is expected to remain in check. Moreover, valuation provides limited upside from current levels. Hence, we maintain Neutral on the stock.

Outlook

We expect a 12% earnings CAGR over FY23-25, led by a 9%/8% sales CAGR in the US/DF segments. While the US pipeline looks interesting over the next 12-15 months, the overall improvement in return ratios is expected to remain in check. Moreover, valuation provides limited upside from current levels. Hence, we maintain Neutral on the stock.

For all recommendations report, click here