Zydus Lifesciences shares drop 3% after Q1 earnings. Here's why Nuvama upgraded rating, hiked target
Shares of Zydus Lifesciences saw a decline of more than two percent following the announcement of a notable profit drop. The net profit plunged thirty-six percent year-on-year for the first quarter, despite a nearly twenty-two percent increase in operational revenue. Expenses surged by over forty-one percent. However, the managing director remains optimistic about future prospects. Analysts at…
Zydus Lifesciences shares experienced a decline of 3% following the company's disappointing Q1 earnings report. The financial results revealed a significant 36% year-on-year decrease in consolidated net profit, dropping to Rs 939.8 crore from Rs 1,467 crore in the same quarter last year. Despite the profit decline, revenue from operations surged by nearly 22% YoY, reaching Rs 8,017 crore, up from Rs 6,574 crore in the same period of the previous year.
The company's expenses skyrocketed by more than 41% YoY to Rs 6,798 crore during the quarter, while EBITDA dropped 8% YoY to Rs 1,929 crore, and the EBITDA margin contracted to 24.1% from 31.8%. Zydus Lifesciences' managing director, Sharvil Patel, expressed optimism about the company's future, stating, "FY27 is off to a strong, profitable start.
We continue advancing into an innovation-led, patient-centric organization. Our branded portfolio now exceeds 55% of revenues. Notably, the share of branded sales in the US reached 11% and will continue to expand with the upcoming Saroglitazar launch."
Nuvama Institutional Equities upgraded Zydus Lifesciences' rating to 'Buy' and raised its target price to Rs 1,400 apiece, indicating a potential upside of over 17.5% from the stock's previous closing price. The brokerage noted that the company's capital allocation is expected to yield strong returns in the near to mid-term, driven by robust performance in India BGx, improved results in the US specialty business, optimistic prospects in EMEU, and the potential start of the US biologics CDMO business in FY27.
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