Motilal Oswal Sets Target Price of Rs 1080 for Zydus LifeSciences

Zydus LifeSciences Exceeds Expectations in 4QFY26 with Strong Revenue Growth

Zydus LifeSciences (ZYDUSLIF) has delivered a better-than-expected financial performance in the fourth quarter of fiscal year 2026 (4QFY26), with a 9.5% beat on revenue, a 19% beat on earnings before interest, taxes, depreciation, and amortization (EBITDA), and an 11% beat on profit after tax (PAT). The company's revenue traction in the United States and emerging markets was higher than expected for the quarter.

The domestic formulation (DF) and consumer wellness revenue came largely in line with expectations. Notably, ZYDUSLIF reported stable sales in the US segment for the fiscal year 2026, marking a decline of 11% in constant currency terms in the fourth quarter. However, the company is building a strong specialty franchise through the development of 505b2 products and strategic acquisitions.

In addition to its limited-competition generics pipeline, ZYDUSLIF has made significant progress in the DF segment, outperforming the industry and improving the share of chronic therapies in the DF portfolio. The company is also scaling up biosimilar offerings in the DF segment through new launches, including Nivolumab, Aflibercept, and Semaglutide. With a therapy-focused approach and market-specific targets, ZYDUSLIF has delivered strong year-over-year growth in the emerging market segment in 4Q and FY26.

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Outlook

We raise our earnings estimates by 5% for fiscal year 2027 and 4% for fiscal year 2028, taking into account increased traction in limited-competition products in the US, industry-beating performance in DF and other emerging markets, higher R&D spending, and enhanced efforts toward marketing and promotion. We value ZYDUSLIF at 21 times 12-month forward earnings, resulting in a target price of INR1,080.