Zydus LifeSciences Q3 Results Review - India, US, Emerging Market Drives Earnings: Motilal Oswal

Motilal Oswal Report

Zydus Lifesciences Ltd.'s delivered better-than-expected performance for Q3 FY24. Zydus Lifesciences exhibited superior execution in the domestic formulation and emerging markets; however, this was partly offset by a subdued performance in the active pharmaceutical ingredient segment for the quarter.

We raise our earnings estimate by 6%/7% for FY24/FY25 to factor in

1. the extended limited competition for g-Asacol,

2. DF growth surpassing industry standards, and

3. the development of a differentiated product pipeline in the US generics segment.

We value Zydus Lifesciences at 21 times 12 million forward earnings to arrive at a price target of Rs 820.

Zydus Lifesciences continues to build a robust product pipeline in innovative, branded generics as well as generics category. Further, the operational efficiency is expected to drive better-than-industry growth in the DF segment.

However, we reiterate our 'Neutral' stance on the stock, given the limited upside from the current levels.

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