Zydus Q1 FY27: Consolidated PAT Falls 36% YoY to ₹940 Cr Despite 22% Revenue Growth

Zydus Lifesciences' consolidated (primary basis) Q1 FY27 (quarter ended June 30, 2026) profit after tax fell 35.9% year-on-year to ₹939.8 Cr, down from ₹1,466.8 Cr in Q1 FY26 and 26.1% below the ₹1,272.5 Cr reported last quarter (Q4 FY26). This came even as consolidated revenue from operations grew 21.9% YoY to ₹8,017.0 Cr (₹6,573.7 Cr a year ago), up 5.7% sequentially — matching management's own headline of revenue up 22% to ₹80,170 Mn. Basic EPS was ₹9.35 versus ₹14.58 a year ago. Standalone (India-only) PAT was ₹339.6 Cr on revenue of ₹2,872.2 Cr, EPS ₹3.38 — a materially different growth story from the consolidated numbers given the scale of overseas acquisitions folded in this year, so readers comparing the two bases should expect divergence.

The gap between strong revenue growth and a sharp profit decline is a margin story. Consolidated EBITDA margin (PBT before exceptional items, plus depreciation and finance costs, over revenue) came in at ~25.4%, down from ~34.1% in Q1 FY26 and ~35.4% last quarter — only narrowly above management's own >24% FY27 guidance floor. Depreciation & amortisation more than doubled YoY to ₹554.7 Cr (₹238.1 Cr) and finance costs rose 84% to ₹156.0 Cr (₹84.7 Cr), both reflecting the debt and PPA amortisation from the Amplitude Surgical, Comfort Click and newly closed Assertio Holdings acquisitions (Assertio completed June 16, 2026, so only ~2 weeks are in this quarter). Employee costs rose 36% YoY to ₹1,368.2 Cr on the larger consolidated headcount. Crucially, the core Pharmaceuticals segment — unaffected by these deal structures — also saw its segment PBT fall 32.7% YoY to ₹1,245.2 Cr even as its revenue grew 10.2% to ₹6,298.1 Cr, so the squeeze isn't confined to acquired businesses; it shows up in the base pharma franchise too, consistent with the 'competitive pressures' and R&D step-up management flagged last quarter. The new Medical Technologies segment (Amplitude), consolidated only from July 2025, posted revenue of ₹283.0 Cr but a widened loss of ₹81.7 Cr (₹74.1 Cr loss a year ago on near-nil revenue), directly diluting group profitability. Exceptional items were a modest net ₹18.2 Cr expense (₹109.1 Cr Assertio severance provision plus ₹55.9 Cr antitrust settlement provision, offset by a ₹146.8 Cr Teva litigation settlement receipt) and were nil a year ago — immaterial to the decline, so adjusted YoY PAT growth is essentially unchanged at ~-35%.

The stock went into the print at ₹1,131.4, down 0% over the past month of trading.

For context: revenue is at a 6-quarter high.

Our pre-result preview had flagged margin headwinds as the central question for this print, expecting revenue of ~₹6,800–7,050 Cr and only single-digit PAT growth against a Street consensus that had already downgraded the stock from Strong Buy to Buy on FY27 margin concerns. Actual revenue of ₹8,017 Cr beat that range comfortably, but the beat is largely inorganic (Amplitude and Comfort Click were not yet consolidated in the year-ago quarter); PAT's 35.9% YoY decline is a clear miss against the 'single-digit growth' bar the Street had set, confirming rather than allaying the pre-result margin concern. A brokerage note ahead of Q4 FY26 results had projected FY27 EBITDA margin contracting to around 24% on higher R&D spend, Assertio-related operating costs and Mirabegron competitive pressure — this quarter's ~25.4% print sits right in that zone. Management's own release called Q1 'a strong, profitable start' to FY27 and highlighted the branded portfolio crossing 55% of revenue with US branded share at 11% ahead of the Saroglitazar launch — that framing describes the topline and pipeline progress but doesn't square with a 36% YoY drop in consolidated PAT. Concurrent developments this quarter included a ₹1,106.3 Cr equity buyback completed on June 18, 2026 (8.73 million shares extinguished at up to ₹1,260/share), two USFDA approvals (Indocyanine Green injection; EIR for an injectable facility), the REVAHALE COPD launch, a ₹10.85 Cr stamp duty demand, and a temporary operations suspension from heavy rains — none of these materially moved the quarter's numbers.