Mumbai: Shares of Lupin Ltd on Thursday fell as much as 7.7% to hit near fresh three-year low after the company posted weaker-than-expected earnings in the March quarter due to decline in US revenues and certain one-time expenses.
Concerns over compliance issues also weighed on the stock after television channel CNBC-TV18 reported late Wednesday that the US Food and Drug Administration (FDA) has issued a Form 483 to Lupin’s manufacturing unit in Indore for violation of good manufacturing practices.
The stock touched a low of Rs1,133.70, a level last seen on 8 August 2014. The stock has declined by 13.8% in four consecutive sessions. So far in 2017, it is down 22%.
At 9.46am, Lupin was trading at Rs1,157.35 on the BSE, down 5.7% from the previous close, while India’s benchmark Sensex index rose 0.5% to 30,443.61 points.
The company reported 49% drop in its consolidated net profit to Rs380.21 crore in the quarter ended March, while revenue rose marginally 1.3% to Rs4,161.88 crore. A Bloomberg poll of 26 analysts had estimated the company’s net profit at Rs642.90 crore and net sales at Rs4,369 crore.
Sales in the US, its biggest market, declined 15.1% to $276 million on last year’s high base which included contribution from Glumetza generic sales under a six-month marketing exclusivity period.
The company’s management guided towards flattish US sales growth in financial year 2017-18 due to limited high-value launches and erosion in the base business.
“Lupin is facing regulatory/competitive challenges in key US and Japan markets. US concerns are on account of continued customer consolidation, incremental competition in top markets and slower than expected Gavis ramp-up. Further few critical FY19 launches have been pushed out to FY20. Japan market could see pricing related regulatory pressure,” brokerage firm CLSA said in a note to its investors.
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CLSA expects that the regulatory and competitive challenges would be visible in fiscal year 2018 and sees US sales remaining flat over two fiscal years, FY17-19. It has downgraded Lupin’s stock to “outperform” from “buy” and cut its target price to Rs1,350 a share from Rs1,760 earlier.
ICICI Securities expects that near-term profitability would remain impacted by increased competition in key products namely generic Glumetza and Fortamet.
Of the analysts covering the stock, 30 have a “buy” rating, nine have a “hold” rating, while four have a “sell” rating, shows Bloomberg data.