Lupin Q4 preview: Profit to narrow YoY despite improved operational performance

Lupin, India's second-largest drugmaker by sales, is likely to report a 15 percent year-on-year (YoY) decline in the fourth quarter FY18 net profit due to increased competition for its US generic portfolio.

A Reuters poll of analysts estimates an increase in net profit to Rs 323.8 crore.

In the fourth quarter of FY17, the company posted a profit of Rs 380.2 crore.

The Reuters poll estimates revenue drop of 5 percent YoY to Rs 3,952 crore in Q4FY18.

The company will announce its results on May 22.

HDFC Securities estimates a topline decline of 11 percent YoY and 4 percent QoQ but EBITDA margin to expand 100 basis points YoY and 200 basis points QoQ to 19.3 percent.

“With no incremental competition in gFortamet and gGlumetza and absence of one-off costs, Lupin to report improved operational performance in 4QFY18,” HDFC Securities said.

In a research report, Edelweiss Securities said they expect Lupin to post US sales at USD 215 million to remain stable sequentially as the launch of gAxiron and gAncobon are expected to offset a loss of gFosrenol exclusivity (in Mar '18) and increased competition in gMinastrin (Glenmark) and gFortamet (Nostrum).

“India business to grow 5% YoY. EBITDA margins expected to grow sequentially to ~18%, as the base was adversely impacted one‐ off forex volatility,” Edelweiss said.

Things to expect from management commentary 

FY19 revenue and EBITDA guidance

Visibility on significant product launches in the US market in FY19

Commentary on price erosion on a base business portfolio in the US