Motilal Oswal's research report on Zydus LifeSciences
Zydus Lifescience (ZYDUSLIF) delivered a marginal miss on 2QFY24 financial performance. Revenue growth was modest YoY in the domestic formulation (DF) segment (due to weak season) and US generics (due to lower business from niche opportunity). However, the outlook is expected to be better on new launches. It continues to put efforts on R&D front for innovation portfolio. We raise our FY24/FY25 EPS estimates by 6% each to factor in a) delay in competition for certain key product in the US generics segment, b) volume expansion/market share gain in select therapies in the DF segment, and c) cost optimization measures.
Outlook
We value ZYDUSLIF at 20x 12M forward earnings to arrive at a TP of INR660. Efforts toward the innovation portfolio are on track across NCEs/Biotech/ specialty products. Further, it is also building the ANDA pipeline with a focus on limited competition/FTF products to achieve sustainable profitable growth in the US generics segment.
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