Lupin Limited (NSE:LUPIN) (BSE:500257)

Lupin limited is an India-based transnational pharmaceutical Company, producing a wide range of generic and branded formulations. The Company has market share in key markets in the cardiovascular (prils and statins), diabetology, asthma, pediatrics, CNS, GI, anti-infective and NSAIDs therapy segments, Anti-TB and, cephalosporins segments. The Company’s key divisions in India are Pinnacle Cardiology, Lupin metabolics, Lupin blue eyes, Lupin CVN, Lupin diabetes care, respira, endeavour, Lupin Mindvision, Lupin Ikonic, Lupin Maxter, anti-tuberculosis, anti-biotics, gynaecology, orthopaedic and dermatology division. The Company is a key player in India’s respiratory (anti-asthma) segment, cardiovascular segment and the diabetes segment.

Official website: www.lupinworld.com

For 4QFY2015, Lupin posted numbers below our expectations. On the top-line front, Lupin posted a flat growth of 0.1% yoy to Rs3,054cr (V/s Rs3,515cr expected). The key geographies - US, Europe, India and Japan posting a dip of 6%, a growth of 9%, a growth of 15% and a dip of 9%, respectively. On the operating front, the gross margins expanded by 79bp yoy; inspite of the same, the OPM dipped by 142bp yoy to 25.1% (V/s an expected 26.3%). The PAT came in at Rs547cr (V/s Rs626cr expected), posting a yoy de-growth of 1.1%. We maintain our Neutral rating on the stock. Below expectation numbers: On the top-line front, Lupin posted a flat growth of 0.1% yoy to Rs3,054cr (V/s Rs3,515cr expected). The key geographies - US, Europe, India and Japan posting a dip of 6%, a growth of 9%, a growth of 15% and a dip of 9%, respectively. Other markets like South Africa and ROW posted a 15% growth and a dip of 3%, respectively. On the operating front, the gross margins expanded by 79bp yoy; inspite of of the same, the OPM dipped by 142bp yoy to 25.1% (V/s an expected 26.3%). The main reason for variance is lower-than-expected sales. Also, the employee cost and R&D expenditure rose by 23.8% and 26.1% yoy respectively. R&D expenditure during the quarter was 10.1% of sales V/s 8.0% of sales in 4QFY2014. Thus, the PAT came in at Rs547cr (V/s Rs626cr expected), posting a yoy de-growth of 1.1%. Outlook and valuation: We expect Lupin to post a CAGR of 17.0% in net sales to Rs17,244cr and earnings to report a 15.3% CAGR to Rs71.1/share over FY2015–17E. Currently, the stock is trading at 27.2x and 23.8x its FY2016E and FY2017E earnings, respectively. We remain Neutral on the stock.

Source http://www.angelbroking.com

Lupin announced lower-than-expected numbers for 1QFY2016. Its sales for the quarter dipped by 6.4% yoy to Rs3,074cr V/s an expected Rs3,600cr. Overall formulations posted a sales dip of 8.0% yoy to Rs2,748.6cr and APIs posted an 11% yoy growth to Rs325.7cr. On the operating front, the gross margin came in at 68.0% V/s an expected 65.5% and V/s 67.9% in the corresponding previous year period. EBITDA margin came in at 24.2% V/s an expected 27.0% and V/s 32.2% in 1QFY2015. Consequently, the PAT came in at Rs525.5cr V/s an expected Rs749cr and V/s Rs624cr in 1QFY2015, ie a decline of 15.8% yoy. We are Neutral on the stock, given the valuations. Below expectation numbers: Lupin’s sales for the quarter dipped by 6.4% yoy to Rs3,074cr V/s an expected Rs3,600cr. Overall formulations posted a sales dip of 8.0% yoy to Rs2,748.6cr and APIs posted an 11% yoy growth to Rs325.7cr. Formulation sales dipped as US posted a decline of 26% yoy to Rs1,109.6cr, owing to the base impact and on account of a few launches during the quarter. On the operating front, the gross margin came in at 68.0% V/s an expected 65.5% and V/s 67.9% in the corresponding previous year period. EBITDA margin came in at 24.2% V/s an expected 27.0% and V/s 32.2% in 1QFY2015. The decline in EBITDA margin is mainly owing to lower sales and higher R&D expenditure. During the quarter, R&D expenditure as a percentage of sales rose to 10.2% V/s 7.4% in 1QFY2015. Consequently, the PAT came in at RS525.5cr V/s an expected Rs749cr and V/s Rs624cr in 1QFY2015, ie a yoy de-growth of 15.8%. Outlook and valuation: We expect Lupin to post a CAGR of 9.5% in net sales to Rs15,110cr and earnings to report a 9.7% CAGR to Rs64.3/share over FY2015–17E. Currently, the stock is trading at 32.1x and 25.2 its FY2016E and FY2017E earnings, respectively. We remain Neutral on the stock.

Source: http://www.angelbroking.com/