Zydus Lifesciences Q3 Review  — One Offs Impact Margins; Systematix Recommends 'Hold', Revises Target Price

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Systematix Research Report

Zydus Lifesciences Ltd. Q3 FY25 revenues were largely line with consensus. Owing to certain one-off expenses (Rs 950 million), reported Ebitda margins were lower than expectation, but adjusted for the same they were inline ( 28%). Revenue was up 18% YoY and flat QoQ. U.S. formulations was flat sequentially, but higher 30% YoY (led by generic Mirabegron).

India Branded formulation growth was weak (5% YoY). North America revenue now stands at 47.0% of the total revenue for Zydus and the dependence should increase further in subsequent quarters led by incremental contribution from sitagliptin franchise and gRevlimid.

gAsacol HD which is one of the large products for Zydus in the US market, has started to decline owing to competition (Teva). The impact of competition will be more noticeable in upcoming quarters.

In CY26, gRevlimid should continue to sustain, while the mirabegron opportunity remains uncertain as it is contingent on litigation timelines. The U.S. business should continue to see new launches (Zituvio, partnered 505(b)(2) products, new approval from LiqMed portfolio and CUTX-101).

The pivotal clinical data on Saroglitazar in primary biliary cholangitis will be an important event to monitor (Q3 FY26) and should shape sentiments around medium to long term growth opportunity for Zydus in the US.

We revise our estimates as we build a higher contribution from Zituvio, longer exclusivity around Mirabegron and also incorporate CUTX-101 which recently received a priority review from the U.S. FDA. Our revised target price stands at Rs 1,011, based on 25 times FY27 EPS and we recommend Hold on the stock.

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