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Informist, Monday, May 19, 2025

By Sunil Raghu

AHMEDABAD - Zydus Lifesciences Ltd.'s consolidated net profit for the March quarter is seen rising 16.2% on year to INR 13.7 billion, led by growth in the US market as well as Indian formulations business, according to the average of estimates of 13 brokerage firms. Sequentially, the bottom line is seen rising 34%, from INR 10.2 billion in the December quarter.

The net profit estimates by the brokerages range from INR 10.9 billion by Nirmal Bang Equities Pvt. Ltd. to INR 16.5 billion by JM Financial Institutional Securities Pvt. Ltd.

The drugmaker's net sales are expected to rise 10% on year to INR 60.9 billion, according to the average of the estimates. Sequentially, the net sales are seen rising 15.5%. The estimates for net sales range from a low of INR 57.8 billion by Nirmal Bang Equities to a high of INR 71.5 billion by Nomura Equity Research.

Motilal Oswal Financial Services expects the company's domestic formulations sales to grow 12.5% on year, driven by growth in cardiac, anti-infective and antineoplastic drugs. It expects the pharma major to deliver 12% on-year rise in sales, aided by superior performance in chronic therapies. Nirmal Bang too expects Zydus Life to achieve a 10% on-year market growth in the domestic business despite weak growth in acute therapies. Systematix, which expects Zydus Life's revenue to increase 18% on year and 24% on quarter, said that domestic business for the pharma major could be 'lackluster'.

Most brokerage firms tracking the company expect the company's US revenue to rise on year in Jan-Mar. They expect Revlimid, used to treat myelomea – a type of blood cancer, to contribute substantially to the company's bottom line. Nirmal Bang sees Zydus Life's revenue growing 5.5% on year, with the US business expected to grow 6%.

Motilal Oswal expects Zydus Life to benefit from a low base of past year and improved off-take of Mirabegron, a drug to treat overactive bladder. This, it says, would also help Zydus Life offset the impact of the competition on Asacol in the US market. Motilal Oswal expects Zydus Life to log 16% on year growth in US sales for the quarter, driven by increased traction in niche products. ICICI Securities expects Zydus Life to earn $90 million through sales of Revlimid and $55 million from Myrbetriq from the US market during the March quarter. It expects Zydus Life to achieve fastest growth in US markets among all larger peers, with a 20% on-year growth at $365 million.

Zydus Lifesciences will announce its March earnings on Tuesday.

The company's earnings before interest, tax, depreciation, and amortisation are seen at an average of INR 19.9 billion, with estimates ranging from INR 13.5 billion to INR 23.9 billion, according to estimates from 13 brokerages. Nirmal Bang sees the EBITDA margin declining 605 basis points on year to 23.3% due to change in the product mix and increase in other expenses. It also expects Zydus Life's net profit margin to contract 760 bps. HDFC Securities Ltd. sees Zydus Life's EBITDA margin expand by 240 bps on year and steady costs leading to steady operating performance.

Analysts said they were looking for an update on the progress in scaling up the Liqmeds business, which Zydus Life had acquired for nearly INR 7 billion in October 2023. Other than Liqmeds, analysts are also tracking the progress of the new chemical entities pipeline development and scale up of some 505(b)(2) drugs in the US market. The 505(b)(2) are a type of drug applications used by US drug regulator that lets companies develop and market new drugs or modifications of existing drugs by leveraging data and information from other approved drugs. The analysts are also watching the timelines around clinical data on Saroglitazar, a drug developed primarily to manage metabolic disorders, and recent acquisition in the medical device space.

Among the 13 brokerages polled, seven have given an 'add' call on Zydus Life share, with two giving a 'hold' call, two a 'sell' call, and one each with a neutral stance and no recommendation on whether the investors should buy, sell or hold the stock.

At 1304 IST, shares of the company traded 1.4% higher at INR 915.65 per share on the National Stock Exchange. At this price, the stock is down nearly 6.3% from its level of INR 977 at the end of the trading session on Feb. 5, the day its December quarter earnings were announced.

Following are the Jan-Mar consolidated earnings estimates for Zydus Lifesciences based on reports from 13 brokerage firms in descending order by estimate of net profit:

End

US$1 = INR 85.37

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Ashish Shirke

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