Zydus Lifesciences, Alkem Lab, Nykaa, Astral, Ashoka Buildcon, Star Cement, Sansera, Suprajit & More Q1 Review

HDFC Securities maintains a cautious stance on Zydus Lifesciences due to falling Ebitda margins (FY26-28 estimated at 24-26% vs 29.8% in FY25), despite optimism on new launches and specialty asset monetization. Alkem Laboratories retains strong outlook for India market growth and aims for successive Ebitda margin improvement of 100bps annually, aided by CDMO and MedTech diversification.

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Zydus Lifesciences:

While Zydus expects modest US sales growth and promising 505(b)(2) traction, the brokerage flags a sustained Ebitda margin deterioration through FY28 as a key concern. Completion of the Amplitude Surgical acquisition and novel drug pipeline offer long-term monetization potential.

Alkem Laboratories:

Alkem's cost control and launch of new growth avenues via CDMO (Enzene US) and MedTech (Exactec) support stable Ebitda margin guidance and targets quarterly improvement. India formulation business continues to outperform the overall market.

FSN E-commerce Ventures (Nykaa):

Nykaa posted better-than-expected margins due to own brand mix and ad income. However, persistent profitability struggles in fashion and full valuations lead HSIE to stick to a Reduce, with limited scope for further upside.

IPCA Laboratories:

Margins were dragged by Unichem's cost issues and regulatory provisions in Europe. Despite this, IPCA maintains growth above IPM via therapy expansion and expects recovery from API and new product launches in EU/RoW.

Astral:

First quarter saw volume contraction and 11-quarter-low Ebitda margin (13.6%) due to Rs 250 million inventory loss. July volumes grew ~30% YoY, aiding a near-term recovery. FY26 EPS slashed by 18% due to weak start.

Star Cement:

Strong pricing and production cost stabilization led to a 26-quarter-high Ebitda per ton at Rs 1761. Despite strong visibility, the brokerage downgrades to Add due to rich valuations post recent rally.

Gujarat State Petronet:

Contracting demand from tile (Morbi) sector and low tariffs despite rising transport charges pose structural concerns. EPS chopped by 5% in FY26; target price reduced due to mark-down in Gujarat Gas valuation.

Aavas Financiers:

While strong spread resilience and sound underwriting have kept asset quality intact, the persistent slowdown in disbursements and lack of cost leverage cap growth potential. Earnings revised down modestly, valuation still supports Add.

Sansera Engineering:

Diversification into ADS and premium aluminium forging offers cushion to ICE exposure. However, FY26 margin expansion target pulled due to U.S. tariffs. Valuation trimmed; cautious outlook maintained despite healthy long-term targets.

KNR Constructions and Ashoka Buildcon:

Both infra companies reported execution slippages on delayed project starts and monsoon-related disruptions. Still, robust order pipelines and low leverage prompted the brokerage to maintain Buy with existing target prices and reliance on a H2 rebound.

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