Zydus Lifesciences Ltd. has bagged a price target hike from Macquarie to Rs 1,285 from Rs 1,260 as the brokerage bets on new business buildouts to drive long-term growth.
Macquarie has maintained an 'overperform' rating on the stock and said that the near-term momentum will be carried on the back of existing businesses.
Approximately 25% of Zydus' capital employed has been allocated to newer growth verticals, including MedTech, Specialty, CDMO and D2C Consumer, through acquisitions and organic investments, as per the brokerage.
"We believe these businesses could become growth, margin and ROCE accretive as they scale. The rare disease portfolio within the Specialty and Medtech businesses is growing meaningfully while being profitable," Macquarie underlined.
It added that Saroglitazar's expected US launch in FY27 represents a meaningful opportunity, with peak sales potential of $250-300 million.
Macquarie emphasised highlighted that Zydus has built dedicated management teams and clear execution plans across these growth platforms.
Additionally, the company's exsiting India business places it ahead of peers in the Pharma sector as it has transformed with chronic therapies now contributing over 50% of domestic revenue.
"Strong momentum in innovation and biosimilars could help it re-enter the top five companies in the IPM over the medium term," the brokerage stated.
Further, Macquarie estimates mic shift to branded businesses to drive profitability and ROCE expansion, with revenue proportion increasing from 50% currently to 65% by 2029.
"Given their higher margins and superior capital efficiency, this mix shift should drive a structural improvement in profitability and ROCE," the brokerage pointed out.
Zydus Lifesciences is scheduled to report its Q1 financial results post-market hours on August 11, 2026.
Zydus Q4FY26
The company reported a consolidated net profit of Rs 1,272.5 crore for the March quarter, up 8.7% year-on-year. The topline or revenue from operations rose 16.2% year-on-year to Rs 7,587 crore from Rs 6,528 crore.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) decreased 11.4% to Rs 1,919 crore from Rs 2,165 crore in the year-ago quarter, while EBITDA margin stood at 25.3% compared to 33.2% in the year-ago period.
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