zydus lifesciences stocks: Momentum Pick: Zydus Lifesciences can gain 8-20% based on these technical, fundamental triggers
Zydus Lifesciences is an Indian pharmaceutical company present across the pharmaceutical value chain of research, development, manufacturing, marketing, and selling of finished dosage human formulations, active pharmaceutical ingredients (APIs), animal healthcare products, and consumer wellness products. The company has a global presence and sells its products in the US, India, Europe, and emerging markets, including countries in Latin America, Asia Pacific region, and Africa.
Zydus Lifesciences has given returns of more than 35% over a 12-month period outperforming the Nifty50 which has given 1% returns during this period according to data sourced from Trendlyne.
Technical View | Santosh Meena | Target: Rs 540 | Upside: 8%
“The counter is continuously making higher highs and higher lows and has significantly gained from the low of 320, but 500 is an immediate psychological hurdle. Above 500, we can expect a rally towards 540, which is a 61.8% retracement of the previous fall from 670 to 320,” Santosh Meena, Head of Research at Swastika Investmart said.
“On the downside, 450 will act as a strong base. The overall texture is bullish with a buy-on-dip strategy where 440 should be a stop loss,” Meena said.
The stock has been relatively less volatile and has traded with a 1-year beta of 0.62, the Trendlyne data showed.
Momentum indicators RSI and MFI indicate that the stock is trading in an overbought zone or heading there. RSI is at 68.4 while the MFI is at 75.3. A number above 70 indicates that the stock is in an overbought zone while a number below 30 means that it is in the oversold territory.
The average broker target for this stock is Rs 511 according to Trendlyne.
Fundamental View
Sharekhan: Buy | Target: Rs 572 | Upside: 20%
Sharekhan maintains a ‘Buy’ on Zydus Lifesciences with an unchanged price target of Rs 572. The stock was recommended at a price of Rs 478. The company is expected to reap the benefits of strong product launches in the US including for gTrokendi XR and gRevlimid, transdermal along with volume growth, the brokerage noted.
Domestic market is expected to grow strong as well, driven by NCEs (New Chemical Entity) and biosimilar portfolio of products, it said in a report.
Sharekhan expects revenue/PAT CAGR of 10.1%/12.0% over FY2022-FY2025E and maintained revenue and earnings estimates based on strong product approvals, likely scale up in the base business and new product launches in the short to medium term in the US and India.
The company is also seen to benefit from stabilisation of input and freight costs and likely benefits from a better product mix and operating leverage, the report said.
Stock trades at an attractive valuation of 18.6X/16.7X its FY2024E/FY2025E EPS, which is trading below the listed peer set.
Key Risks
- Price erosion in the US generics business could hurt performance.
- Forex volatility could affect earnings.
ET CONTRIBUTORS(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
