Zydus Lifesci. Q2 FY27 Results (NSE: ZYDUSLIFE)
Signal: Margin pressure
The read
The key inflection is a sharp profit-growth deceleration: revenue accelerated 29.2% YoY to 79,096 million, but EBITDA fell 6.0% and margin contracted 890bps to 24.0%, leaving PAT down 26.6% to 9,255 million; branded India, North America specialty and consumer wellness momentum is not yet converting into earnings.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹7,909.6 Cr | 29.2% | -1.3% |
| Net profit | ₹925.5 Cr | -26.6% | |
| EBIT margin | 24.0% |
P&L walk
Revenue increased 29.2% YoY to 79,096 million, but EBITDA declined 6.0% to 18,945 million and EBITDA margin contracted 890bps to 24.0%; PBT fell 25.5% and PAT fell 26.6% to 9,255 million, so scale growth did not translate into earnings growth.
Segments
Consumer Wellness was the fastest-growing disclosed business at 11,223 million, up 76.1% YoY, while MedTech grew 46.6% to 2,246 million; North America Formulations remained the largest business at 33,145 million, up 20.8% and 7.0% QoQ.
Key positives
- India Formulations revenue rose 18.3% YoY to 18,844 million, with volume and new products contributing around two-thirds of growth and secondary sales up 20%.
- North America Formulations grew 20.8% YoY to 33,145 million and 7.0% QoQ, supported by base-business volume expansion and US specialty momentum.
- Consumer Wellness revenue increased 76.1% YoY to 11,223 million; domestic business grew 29%, with skin and hair care up 37% and food and nutrition up 25%.
- US branded sales reached 16% of US sales, above the previously stated 15% milestone, while branded portfolio expansion remains a stated strategic driver.
- International Markets Formulations grew 33.2% YoY to 10,009 million, indicating broad-based growth across markets.
Key concerns
- EBITDA declined 6.0% YoY to 18,945 million despite 29.2% revenue growth, and EBITDA margin compressed 890bps to 24.0%.
- PAT fell 26.6% YoY to 9,255 million and PBT fell 25.5% to 12,617 million, showing that the revenue acceleration is currently earnings-dilutive.
- R&D investment was 6,573 million, or 8.3% of revenue; the filing does not quantify its YoY movement or establish whether it explains the margin contraction.
- Consumer Wellness growth was strong YoY but revenue fell 21.5% QoQ to 11,223 million, indicating sequential volatility in the fastest-growing business.
- USFDA inspections at SEZ II Ahmedabad and Moraiya formulations facilities resulted in one and five observations respectively; management said it is addressing them.
Research and educational content only. Not investment advice.