ZYDUS LIFESCIENCES     

Published: Mar 31, 2023
Updated: Mar 31, 2023

Big footprint in global markets

ZYDUS LIFE Sciences Ltd (formerly Cadila Healthcare Ltd) is one of the top Indian pharmaceutical companies. The Zydus group is headquartered in Ahmedabad. It has more than 30 manufacturing plants and research facilities spread across Gujarat, Maharashtra, Goa, Himachal Pradesh and Sikkim in India, as well as in the US and Brazil.

Consider: On an equity capital of Rs 102 crore and a promoter holding of 75%, revenues crossed Rs 15,000 crore in FY22, net profit was Rs 2,326 crore and the debt- equity ratio was 0.25. The company has grown with RoCE and RoE of a minimum 11% in the past 3 years. New launches in the pipeline in the US and Europe augur well for the company in the next 4-5 years.

BRAND PROMISE

The company has built brands which are on the way to delivering peak performance, as brands have their own break-out time to give benefits in the long run. According to us, Zydus is at an inflection point in the company’s history where the real value unlocking will happen because of the continued growth in its performance, new product launches, brand value growth in international markets and sustainable growth in profits.

If we look at the December quarter results, the company has grown its sales and net profit

• Dec quarter revenues grew 19.8% yoy at Rs 4,362 crore
• EBITDA grew 27.2% yoy to Rs 956 crore. EBITDA margins improved 127 bps yoy to 21.9%
• Adjusted net profit rose 22.8% yoy to Rs 622.5 crore

If we look at technical charts, the stock price of Zydus has broken above an important resistance zone of the last 5 years with a ‘cup and handle’ pattern and has consolidated comfortably above the resistance zone. Now we see the stock is ready for a quick uptrend to reach targets of 525-565 In the next one year, and for long-term and extra long-term investors, the stock may reach targets of 645-700+ in the next 2 years. In 5 years, our targets remain 1200-1500+. ‘Invest’.