Zydus Life Q2: Solid beat on bottom line, analysts mixed on growth outlook

Zydus Life Q2 results review: Foreign brokerage Nomura said Zydus Life delivered results above estimates, led by a stronger-than-expected performance in India.

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Zydus Life Q2 results review: Pharmaceutical major Zydus Lifesciences’ (Zydus Life) second-quarter of financial year 2026 (Q2FY26) earnings have drawn a mixed response from brokerages, with most acknowledging the strong operational performance and resilient domestic business, even as opinions differ on the company’s growth trajectory amid moderation in its key US portfolio.

 

Foreign brokerage Nomura said Zydus Life delivered results above estimates, led by a stronger-than-expected performance in India. Consolidated sales were 2 per cent ahead of its projections, mainly driven by a 6 per cent beat in the domestic market, even though exports lagged by 4 per cent. US revenue came in at $313 million – $7 million below Nomura’s estimate – impacted by lower contribution from gRevlimid, a key generic product.

 

The brokerage noted that earnings before interest, tax, depreciation and amortisation (Ebitda) came in 4 per cent ahead of expectations, while profit after tax (PAT) exceeded forecasts by a sharp 34 per cent, aided by forex gains of ₹414 crore. Zydus Life guided for an Ebitda margin of over 26 per cent for FY26, versus Nomura’s current forecast of 26.1 per cent.

 

Nomura reiterated its ‘Buy’ rating on Zydus Life on the back of strong domestic fundamentals and future growth levers from its specialty and vaccines portfolio. It values Zydus at ₹1,140 – based on 30x FY27 earnings per share (EPS) of ₹38 (excluding key products like gRevlimid and gMyrbetriq). The brokerage believes Zydus’ domestic businesses could contribute about 44 per cent of Ebitda by FY27, while a healthy balance sheet leaves room for value-accretive acquisitions. “We see upside potential as Zydus builds multiple growth engines beyond generics,” Nomura said.

 

However, not all brokerages are equally optimistic. Nuvama Institutional Equities (Nuvama) retained its ‘Reduce’ rating on Zydus Lifesciences stock with a target price of ₹900, pointing to pressure on adjusted earnings. 

 

While headline revenue beat consensus by 3 per cent, Nuvama analysts noted that after adjusting for forex gains, Ebitda and PAT missed expectations by 1 per cent and 11 per cent, respectively.

 

Gross margin at 72.4 per cent exceeded its forecast, but the adjusted Ebitda margin at 26.2 per cent fell short by 112 basis points (bps). Nuvama said the US business performed better than expected, while India sales were broadly in line. It flagged several priorities for Zydus Life over the next two years – securing approvals for specialty products, integrating the Consumer Health and MedTech segments, stabilising the recently acquired Agenus business post-FTC clearance, and reducing leverage.

 

“While FY26 earnings are likely to remain stable, we expect about a 10 per cent contraction in FY27,” Nuvama said, adding that the outcome of Mirabegron litigation, expected in Q4FY26, will be a key swing factor for FY27 profitability.

 

Those at Motilal Oswal Financial Services, meanwhile, maintained a ‘Neutral’ stance on the Zydus Life shares, calling Q2 an ‘in-line operational show’ with promising long-term diversification efforts. The brokerage highlighted steady traction in India’s chronic therapies and innovation-led growth in the domestic formulation (DF) segment. It also pointed to the company’s growing non-pharma bets through acquisitions in consumer wellness (Comfort Click) and med-tech (Amplitude Surgical).

 

“Zydus is building a diversified growth engine across pharma, OTC, and med-tech,” Motilal Oswal said, adding that strong execution in US generics and new 505(b)(2) launches like Beizray bolster its product pipeline. However, it expects a high base of gRevlimid to cap near-term growth.

 

The brokerage raised FY27 and FY28 earnings estimates by 6 per cent and 3 per cent, respectively, and valued the stock at 22x one-year forward earnings, arriving at a target price of ₹990.

 

That said, while Nomura remains bullish on Zydus’ long-term fundamentals and domestic strength, Nuvama prefers caution amid regulatory and litigation uncertainties, and Motilal Oswal is neutral, recognising the diversification potential but mindful of base effects. The Street appears divided – but most agree Zydus has laid the groundwork for multi-pronged growth beyond generics.