Lupin To See Strong Growth, Improved Margins This Fiscal, Say Analysts

Lupin Ltd. may report stronger growth with improved margins in FY25 despite its profit missing analysts' estimates in the fourth quarter, according to brokerages. Nomura maintained its 'buy' position, while Motilal Oswal Financial Services remained 'neutral' on the stock.

The drug makers' net profit rose 0.79% year-on-year to Rs 439 crore in the quarter ended March 2024, according to an exchange filing. That compares with the Rs 520 crore consensus estimates of analysts polled by Bloomberg.

Excluding impairment expenses, Lupin's net earnings were 13% above estimates, Nomura said in a note. The brokerage expects the company to grow across geographies in FY25.

Lupin incurred an impairment of Rs 200 crore related to intangible assets, Motilal Oswal said in a note on Tuesday.

• Revenue up 11.97% at Rs 4,961 crore. (Bloomberg estimate: Rs 5,092 crore).

• Ebitda up 72.51% at Rs 996 crore. (Bloomberg estimate: Rs 996 crore).

• Margin up 705 bps at 20.09%. (Bloomberg estimate: Rs 19.6%).

• Net profit up 0.79% at Rs 439 crore. (Bloomberg estimate: Rs 520 crore).

• Board recommends dividend of Rs 8 per share.

• Nomura maintains a 'buy' on Lupin, with a target price of Rs 1,949 apiece, implying an upside of 16%.

• Revenues rose 13% year-on-year, but was 1.5% below our estimate.

• India/API revenues were below our forecasts.

• Ebitda margin expansion sequentially was amid a seasonally weak quarter and higher R&D spend.

• Ebitda was 8% above estimates.

• Excluding impairment, net earnings are 13% above estimates.

• Expects stronger FY25 growth across key geographies and margin improvements.

• The target price of Rs 1,949 is based on 27.5-times FY26F EPS of Rs 70.9.

• Operationally in line, according to Motilal Oswal. Gross profit margins are offset by higher spending in the R&D space.

• Lupin took an impairment of Rs 200 crores related to intangible assets.

• Gross margin expanded 780 basis points YoY to 68.3% due to a better product mix, Motilal Oswal said.

• Ebitda margin expanded on the back of gross margin expansion and a decrease in other expenses.

• During January–March, the drugmaker received approval from the US Food and Drug Administration for producing many generic drugs, and launched six products, the brokerage said.

• Motilal Oswal keeps a 'Neutral' rating on the stock with a target price of Rs 1,500, implying a downside of 10.69% from Monday's closing price.

Shares of the company declined 4.85% to Rs 1,598.15 apiece, the lowest level since April 26. It was trading 2.29% lower at Rs 1,641.25 at 10:25 a.m., compared to 0.31% decline in the NSE Nifty 50 index.

The stock gained 124.26% in last 12 months and 23.97% so far this year. The total traded volume so far in the day stood at 7.9 times its 30-day average. The relative strength index was at 55.02.

Out of 39 analysts tracking the company, 12 maintain a 'buy' rating, 13 recommend a 'hold,' and 14 suggest a 'sell', according to Bloomberg data. The average 12-month consensus price target implies a downside of 7.0%.