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Zydus Lifesciences Q4 Results: Profit Falls On One-Offs; Margin Beats Estimates

The company's net profit fell 25% year-on-year to Rs 297 crore in Q4.

<div class="paragraphs"><p>Source: Unsplash</p></div>
Source: Unsplash

Zydus Lifesciences Ltd.’s fourth-quarter profit fell, missing analysts' estimates.

The company's net profit fell 25% year-on-year to Rs 297 crore in the quarter ended March, according to an exchange filing by the Ahmedabad-based drugmaker. That compares with the Rs 674 crore consensus estimate of analysts tracked by Bloomberg.

The profit fell due to some exceptional item write-offs to the tune of Rs 601 crore in the quarter. The company recognised Rs 594 crore as impairment of goodwill towards Sentynl Therapeutics Inc, a wholly owned subsidiary of the group and Rs 7 crore towards expenses incurred in connection with cessation of operations of one of the manufacturing facilities of Zydus Wellness Products Ltd, another subsidiary of the group.

However, the margin, Ebidta and revenues beat street estimates.

Zydus Lifesciences Q4 FY23 Highlights (YoY)

  • Revenue is up 32% at Rs 5,011 crore (Bloomberg estimate: Rs 4,629 crore).

  • Ebitda was up 99% at Rs 1,314 crore (Bloomberg estimate: Rs 1,046 crore).

  • The margin stood at 26.2% as against 17.3%. (Bloomberg estimate: 22.6%).

Other Highlights (YoY)

  • India contributed 41% of the total revenue for the quarter. Total India's revenue grew by 11%, including Covid.

  • Revenue from India's formulation business rose 11%, including Covid, while that from the consumer wellness segment rose 12%.

  • Revenue from North American formulation sales rose by 58% to Rs 2,253 crore, contributing to 46% of total sales. The company filed two ANDAs and received approval for 28 ANDAs, including five tentative approvals, during the quarter. It also launched eight new products.

  • Emerging markets and Europe formulation sales, which make up 9% of the revenue for the quarter, rose 34%, excluding covid revenues.

  • Sales of active pharmaceutical ingredients fell 8%. This contributes to 3% of the revenue.

  • Research and development investments for the quarter stood at Rs 354 crore, which was 7.1% of the revenue.

“We are well poised to maintain growth momentum, with India geography likely to hold double-digit growth, the US business continuing to leverage our robust product pipeline and agile supply chain and scale-up of our emerging market business,” said Sharvil Patel, managing director at Zydus Lifesciences, in the exchange filing that.

The filing further said that:

  • On the super specialty front in India formulations, Zydus Lifesciences retained leadership position in nephrology while in oncology, it was the fastest growing company.

  • On India consumer wellness, slowdown in rural demand seems to have bottomed out and recovery is expected going forward.

  • US growth was driven during the quarter was driven by volume expansion in existing products and new launches.

  • The company had a net cash of Rs 546 crore as on March 31.

  • Capex for the year was Rs 958 crore.

After the results were announced, shares of Zydus Lifesciences were down by 0.69%, while the benchmark S&P BSE Sensex was up 0.22% at 1:44 p.m.