KR Choksey has given Buy recommendation for Zydus Lifesciences with a target price of Rs. 445 in its research report issued on May 25, 2022

KR Choksey’s research report on Zydus Lifesciences

The company posted a 5.3% YoY (+5.7% QoQ) rise in revenue to INR 38.64 bn. Growth in revenue from operations was driven by 13.8% YoY (+7.9% QoQ) rise in India revenue (31% of revenue) and 5.8% YoY (+65.7% QoQ) rise in India Consumer Wellness revenue (17.0% of revenue) in Q4FY22 • Zydus LifeSciences witnessed 140 bps YoY (+177 bps QoQ) decline in gross margins (GPMs) due to inflationary pressures in Q4FY22. The company’s EBITDA declined marginally by 95 bps YoY (+161 bps QoQ) to 22.2% in Q4FY22 though • The board of directors have approved buyback of upto 11.5 fully paid equity shares each having INR 1 FV, representing 1.13% of the total number of equity shares in the paid-up capital of the company at a price of INR 650 / share at an aggregate cash consideration of upto INR 7.50 bn, which is 7% and 4% of the paid up and free reserves, respectively.

Outlook

We apply the same PE of 18.0x to revised FY24E EPS of INR 23.5 (vs earlier INR 24.7 EPS) and also using DCF method, arrive at an amalgamated TP of INR 445.0 (earlier INR 445.0), which gives an upside potential of 21.0% from its CMP of INR 368. Accordingly, we upgrade our recommendation on the shares of Zydus Lifesciences to BUY from ACCUMULATE.

Leave a Reply

Your email address will not be published.