Lupin falls 2% on weak Q2 show; CLSA maintains sell with 12% downside

Shares of Lupin slipped more than 2 percent in the early trade on Thursday as company reported weak set of numbers for the quarter ended September 2018.

The company has reported a massive 41.2 percent fall in second quarter profit to Rs 268.5 crore, dented by lower operating income and US business. However, bottomline increased 32 percent sequentially. Sharp increase in other income limited profit fall YoY.

Revenue from operations during the quarter was flat at Rs 3,951 crore against Rs 3,952 crore in corresponding period last fiscal, with 8.3 percent YoY degrowth in North America formulations business.

Brokerage: Nomura | Rating: Buy | Target: Rs 997

Nomura has maintained buy call on the stock with a potential upside of 12 percent. The firm keeps a target of Rs 997 per share.

It feels that the Q2 is muted but operationally in-line, it expect revival in US in H2 due to seasonality and launch of key products.

Ramp-up in Solosec to have positive impact on margins, it added

Brokerage: CLSA | Rating: Sell | Target: Rs 780

CLSA has maintained sell rating on Lupin with a potential downside of 12 percent. The research house keeps a target of Rs 780 per share.

According to firm, despite favourable currency, the margin pressure continued. The US revival depends on approval/ramp-up of certain big products.

It see a downside risk to FY20 EPS if US business does not revive.

Brokerage: Macquarie | Rating: Underperform | Target: Rs 775

Macquarie has maintained underperform rating on Lupin, while cut target to Rs 775 from Rs 788 per share. It sees a potential downside of 13 percent.

A lacklustre show despite forex tailwind and expect medium-term US sales to remain muted, with a laborious road to recovery, said Macquarie.

Even with improved traction in H2, the valuations are expensive, it added.

At 09:18 hrs Lupin was quoting at Rs 871.80, down Rs 17.15, or 1.93 percent on the BSE.