Zydus Lifesciences reports double-digit growth in Q2, revenue up 20%

Zydus Lifesciences Ltd announced strong double-digit growth in line with estimates, on the back of sustained growth across its key businesses, in its consolidated financial results for the September quarter on Tuesday.

Its consolidated revenue grew 20% year-on-year (y-o-y), from ₹4,369 crore in Q2FY24 to ₹5,237 crore in Q2FY25. The firm posted a net profit of ₹911 crore, up 14% YoY from ₹801 crore in Q2FY24. Ebitda for the pharma major rose 27.5% on-year from ₹1,146 crore in Q2FY24 to ₹1,461 crore in the September quarter this fiscal. Ebitda is earnings before interest, tax, depreciation and amortization. 

Ebitda margin for the quarter grew by 170 basis points to 27.9%, from 26.2% in the corresponding period last year. 

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The company said that its research & development (R&D) spend for the quarter was ₹480 crore, which is 9.2% of its revenues. This was higher than its R&D investment in Q1FY25, at ₹392.5 crore, as well as in Q2FY24, at ₹319.5 crore. The company plans to continue investment in R&D for the fiscal. “Guideline for FY25 is around 8% of revenue…and going forward also, at least for the near future we are looking at the same percentage,” Dr Sharvil Patel, managing director, said in an earnings call with investors after the results.

Zydus's India businesses

Zydus's India businesses, which includes its formulations and wellness segments, accounted for 38% of its consolidated revenues. Its branded business grew 10% y-o-y, outpacing the market in both chronic and acute segments. The India businesses registered a consolidated revenue of ₹1,944 crore.

The company’s US formulations business grew 30% y-o-y, registering a revenue of ₹2,417 crore. It was, however, down 22% quarter-on-quarter from ₹3,093 crore in Q1FY25. The business accounted for 47% of the firm’s consolidated revenue. 

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The company is focusing on scaling up its US business. “We have three-four legs of growth that we are targeting in the US,” Patel said. Apart from their generics business, the company is scaling up their injectables segment, and launching competitive generics. Plus, they are also entering the animal-free protein products segment with their joint venture with Perfect Day Inc. earlier this year, through the acquisition of a 50% stake in Sterling Biotech Ltd. The company is also seeing significant scale-up in its rare and speciality products business, Patel said. 

The company’s active pharmaceuticals ingredients (API) business saw a degrowth of 15% year-on-year with ₹119 crore revenue during the quarter. It accounted for 2% of the consolidated revenue. 

During the quarter, the company’s consumer wellness business acquired Naturell (India) Pvt. Ltd. the maker of Ritebite Max Protein and other products. The business is about ₹130 crore in annual revenue. “We have always indicated that we would like to play in the protein malnutrition slash nutrition space, this gives us a good area to enter,” Patel said during the earnings call. “The brand is a market leader in its category with strong growth,” he added. 

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The company’s performance was in line with Bloomberg estimates, which had pegged its consolidated revenue at ₹5,233 crore, and its net profit at ₹916 crore. Ebitda was estimated to be ₹1,356 crore.

Zydus Lifesciences Ltd shares closed at ₹948.95 on NSE on Tuesday following the Q2 results, 2.4% lower than the previous day.