Zydus Life hits new peak; m-cap hits Rs 1 trn as stock up 60% in 3 months

Shares of Zydus Lifesciences hit a new high of Rs 1,015.70, surging nearly 4 per cent on the BSE in Monday's intraday trade, in an otherwise weak market, after the company said it has received the Establishment Inspection Report (EIR) report from the US drug regulator for its Ahmedabad facility.

Zydus Lifesciences, in an exchange filing, said the company has received the EIR report from the United States Food and Drug Administration (USFDA) for the inspection conducted at the API (active pharmaceutical ingredient) at Ahmedabad facility. An EIR means closure of inspection.

The company had earlier received a Post Application Action Letter from the USFDA for the same inspection confirming that the inspected facility has been considered as ready to commercially manufacture and supply the API.

This facility underwent an inspection from December 14 to December 22, 2023 and has been classified as Voluntary Action Indicated (VAI).

Zydus Life is engaged in the business of manufacturing, marketing, research and development, import and export of drugs and pharmaceutical products. The company has 32 manufacturing facilities/ plants/ factories in India. The company also has six research and development centres in India for generic formulations, API, vaccines, biologics, and new chemical entities across multiple dosage forms.

At 12:55 PM, Zydus Lifesciences was up 1.4 per cent as compared to 0.43 per cent decline in the S&P BSE Sensex.

The stock was quoting higher for a fifth straight trading day and has rallied 10 per cent during the period. In the past three months, the stock of the pharmaceutical company has zoomed 60 per cent. A sharp run-up in stock price has seen the market capitalisation of Zydus Lifesciences touch Rs 1 trillion-mark for the first time today.

Separately, Zydus Lifesciences, on March 6, concluded its Rs 600-crore share buyback programme. The company had proposed to buyback up to 5.97 million equity shares at a price of Rs 1,005 per share via tender offer. The buyback had opened on February 29 and closed on March 6.

Zydus had said that the buyback is a capital allocation decision taken by the company. "The buyback will help the company to distribute a part of the surplus cash to its shareholders holding equity shares thereby, optimizing returns to the shareholders and enhancing the overall shareholders' value in the longer term and improving the return on equity," it had said.

Meanwhile, the January to March (Q4FY24) and April to June (Q1FY25) quarter are the peak seasons for major brands of the company's wellness segment such as Glucon-D and Nycil.

"India formulations contributed 33 per cent of revenue while consumer wellness contributed 9 per cent of revenue as of Q3FY24. Additionally, the recently launched 505(b)(2) – NDA – Zituvio in the US in Q3FY24, promises to be a strong growth driver for the US market over FY25 – FY26, as it is a novel drug (approved in Oct 23 by the USFDA)," analysts at KRChoksey Shares and Securities said.

The brokerage firm believes stronger than anticipated growth in India markets, driven by continued strong growth in chronic portfolio as well as in NCEs such as Saroglitzar, Oxemia, and Ujvira, and more than anticipated growth in the US markets on the back of volumes growth in the base portfolio as well as new launches such as Zituvio and Transdermal products should support higher than anticipated profitable growth over FY23-FY26E. The stock achieved the analysts' target price of Rs 1,006 today.