Zydus Lifesciences Limited

Zydus Lifesciences reported a solid start to FY26 with consolidated revenues reaching ₹65.7 billion, marking a 6% year-on-year increase. The company maintained strong operating profitability with an EBITDA margin of 31.8%, translating to an EBITDA of ₹20.9 billion. Net profit, however, saw a more modest 3% year-on-year growth, totaling ₹14.7 billion. The balance sheet strengthened significantly, with the net cash position improving to ₹56.3 billion by June 30, 2025, up from ₹48.8 billion in March 2025.

The US formulations business demonstrated sustained execution excellence, achieving ₹31.8 billion in revenues, up 3% year-on-year and 2% quarter-on-quarter. India's branded formulations business outpaced market growth with a 9% year-on-year increase, driven by pillar brands and innovation. The International markets formulations business was a standout performer, posting robust 37% year-on-year growth to ₹7.3 billion, reflecting broad-based expansion across key geographies. The Consumer Wellness business, however, experienced challenges due to early monsoon conditions impacting seasonal brands, though its non-seasonal portfolio remained resilient.

The company is actively expanding its specialty portfolio, particularly with 505(b)(2) products, expecting a major scale-up in FY27 and beyond with 25 products in the pipeline. Key launches like Ibrance and other molecules are anticipated in FY27, alongside 30+ generic product launches in FY26. The Saroglitazar Phase II(b) trial data is expected in Q2/Q3 FY26, with a potential launch in FY27 if promising. Desidustat is projected to receive approval in China within the next 12 months, opening a 'tremendously large opportunity' in that market.

Zydus plans a total capex of ₹1,200 crores for FY26, with ₹300 crores allocated to MedTech, including a dialyzer facility expected to be operational in 12-18 months. The company completed the acquisition of an 85.6% stake in Amplitude Surgical, a European MedTech leader, and is acquiring Agenus Inc.'s US biologics manufacturing facility, which is currently under qualification. These initiatives aim to diversify revenue streams, enhance capabilities in orthopedics and interventional cardiology, and establish a global biologics CDMO presence.

Management reiterated its commitment to cost reduction programs, targeting EBITDA margins better than 26% for FY26. The company highlighted ongoing efforts in procurement savings, vendor negotiations, and manufacturing efficiency improvements. While facing price challenges for Revlimid in FY26, the company expects to achieve single-digit growth in the US, supported by new product launches and the base business performance. The International markets are expected to maintain high teens to mid-twenties growth, contributing to overall profitability.