Lupin gains 3% after Credit Suisse upgrades, raises target price

Shares of pharma major Lupin gained 3.5 percent intraday on June 24 after global brokerage Credit Suisse upgraded stock to outperform from underperform and also raised price target to Rs 860 from Rs 800 earlier.

The stock was quoting at Rs 733.05, up Rs 20.65, or 2.90 percent on the BSE at 0955 hours IST, but it fell 18 percent in last one year.

The global brokerage feels concerns on Solosec ramp-up and margin contraction have played out and the company can be close to debt free by FY23 with margin expansion, lower capex and R&D intensity.

Now key catalysts are gEnbrel nod in European Union, Albuterol inhaler in the US and possible Goa clearance, Credit Suisse said, adding on Solosec, it expects the company to either reduce resources or share with another product.

In addition, Japanese brokerage Nomura also maintained its buy call on Lupin with a price target at Rs 1,017 as it expects the consolidation trend in pharma to continue.

Domestic market growth remained challenging and there’s limited scope for new product introductions, it said, adding it sees strategic rationale in acquiring JB Chemicals.

Last week, a media report had indicated that Lupin and Piramal Enterprises are in the race for buying a stake in JB Chemicals but the company denied the report.

Nomura said the company's debt could rise on account of the acquisition and net debt-to-EBITDA could rise beyond 2.5x from 1.9x.