Buy Zydus Lifesciences, target price Rs 485: JM Financial

JM Financial has buy call on Zydus Lifesciences with a target price of Rs 485. The current market price of Zydus Lifesciences is Rs 468.75.

Zydus Lifesciences, incorporated in the year 1995, is a Large Cap company (having a market cap of Rs 47583.72 Crore) operating in Pharmaceuticals sector.

Zydus Lifesciences key Products/Revenue Segments include Pharmaceutical Products, Other Operating Revenue and Export Incentives for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 4400.80 Crore, up 5.30 % from last quarter Total Income of Rs 4179.10 Crore and up 18.43 % from last year same quarter Total Income of Rs 3715.80 Crore. Company has reported net profit after tax of Rs 585.30 Crore in latest quarter.

The company’s top management includes Mr.Pankaj R Patel, Dr.Sharvil P Patel, Mr.Ganesh N Nayak, Mr.Bhadresh K Shah, Mr.Mukesh M Patel, Mr.Nitin R Desai, Ms.Dharmishtaben N Raval, Ms.Apurva S Diwanji. Company has Deloitte Haskins & Sells LLP as its auditors. As on 31-12-2022, the company has a total of 101 Crore shares outstanding.

Investment Rationale
The overall inflationary environment has been cooling down aiding margins along with better product mix. Adj. EBITDAM (ex-Revlimid) has stabilised around c.20%. The brokerage expects the company to meet its EBITDA margin guidance of 21-22%.

The brokerage upgrades its earnings by 3-4% to factor in higher US sales and growth. Further, it believes domestic earnings momentum, US launches and margin sustenance should enable ZYDUSLIF to continue on a sustainable growth path.

Promoter/FII Holdings
Promoters held 74.98 per cent stake in the company as of 31-Dec-2022, while FIIs owned 2.52 per cent, DIIs 13.61 per cent.