Zydus Lifesciences Alert: HOLD Rating Holds, Target Price Adjusted! What ICICI Securities Says Next?

ICICI Securities released a research report on Zydus Lifesciences, noting a revenue beat in Q2FY26 primarily due to recent acquisitions in the consumer wellness and medtech divisions. Despite this revenue growth, the EBITDA margin saw a decline, down 28 basis points year-on-year and 426 basis points quarter-on-quarter. This margin pressure is attributed to the inherently lower margins of the acquired businesses and a reduction in revenue from gRevlimid.

The report highlights that the exclusivity period for gRevlimid is nearing its end. A significant future catalyst is the potential outcome of the Mirabegron litigation, expected in February 2026, which could be crucial for the company. Zydus Lifesciences' domestic business continues to grow in line with market trends, a performance expected to be maintained.

The integration of the medtech and consumer businesses might affect margins in the near term, though the management has reiterated its EBITDA margin guidance of approximately 26% for FY26. Analysts have slightly increased FY26 and FY27 earnings estimates by about 2-3% to account for higher sales from the recent acquisitions. Consequently, the brokerage firm has maintained its HOLD recommendation on the stock, with a revised target price of INR 900 (down from INR 910), based on a price-to-earnings multiple of 22 times FY27 estimated earnings.

Impact This research report from ICICI Securities provides investors with a detailed outlook on Zydus Lifesciences' performance and strategic direction. The maintained HOLD rating and adjusted target price offer guidance for current shareholders and potential investors, influencing trading decisions based on the analysis of revenue drivers, margin pressures, and key litigation outcomes. The report directly impacts investor sentiment and the stock's near-term price action. Rating: 7/10

Difficult Terms: EBITDA Margin: Earnings Before Interest, Taxes, Depreciation, and Amortization margin, a key indicator of a company's operating profitability. gRevlimid: Refers to the generic version of the drug Revlimid, used in treating certain cancers. Mirabegron: A medication used to treat overactive bladder. FY26/27E: Fiscal Year 2026/2027 Estimates, referring to projected financial performance for those years. EPS: Earnings Per Share, which indicates the portion of a company's profit allocated to each outstanding share of common stock.