Nuvama alluded the company’s plans to acquire France-based orthopedics player Amplitude Surgical
for $300 million in two tranches by paying a premium of 81% to its current price. “While the med-tech industry is in a sweet spot with tailwinds aiding its growth, we argue this bolt-on for Zydus Life is a long-term play with amorphous synergies as of now,” it said.
The brokerage is of the view that the deal would be dilutive to Zydus Life’s Earnings Per Share (EPS) by 1% to 3% on its financial year 2026 and 2027 estimates. At 17 times financial year 2024 Enterprise Value-to-EBITDA, the deal is expensive in Nuvama’s view, given the target’s performance and current positioning.”We are not losing sight of Zydus Life’s effort to arrest the gRevlimid fall, but argue the deal comes at a considerable cost,” it said.
It has valued the stock at 20 times its financial year 2027 estimated EPS from its previous valuation of 24x.On Wednesday, UBS too maintained its “sell” rating on Zydus Life with a price target of ₹850. It said that the company’s current cash is used up on this acquisition and it appears expensive with likely EPS dilution for the first few years.
BofA Securities remains “neutral” on Zydus Life with a price target of ₹1,040.
Of the 33 analysts that have coverage on the stock, 17 have “buy” ratings, 10 have “hold” ratings and six have “sell” ratings.
Zydus Life shares were trading 0.5% higher at 893 apiece at 10.05 AM on Thursday, March 13. The stock has declined 20% in the last six months.
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