Prabhudas Lilladher's research report on Lupin
Lupin’s (LPC) Q4FY23 EBITDA of Rs6bn (up 17% QoQ) was above our estimate aided by higher other operating income which included Rs590mn income from PLI grant scheme. Even though adjusted margins improved QoQ (12.5% vs 12% in Q3), however road to recovery was not that meaningful. Over last two years’ profitability got impacted from low GMs and high overheads along with subdued US sales. We believe LPC’s recovery in US sales will be gradual and may hinge on timely niche launches. The key launch gSpiriva further got delayed by 3-6 months.
Outlook
At CMP, stock is factoring margin recovery and certain niche launches in US. Maintain ‘Hold’ rating and our estimates with revised TP of Rs730/share (Rs675 earlier), 20x FY25E EPS as we roll forward.
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