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Lupin 3QFY2013 performance highlights and results update

Contributed by Angel Broking

For 3QFY2013, Lupin’s net sales grew by 38.4% yoy to Rs.2,466cr, above our expectation of Rs.2,090cr. However, OPM for the quarter stood at 23.1%, higher than our estimate of 20.5%. Net profit came in at Rs.335cr, higher than our expectation of Rs.259cr. We continue to maintain our Accumulate rating on the stock.

Better-than-expected numbers: Lupin reported net sales of Rs.2,466cr, up 38.4% yoy, and higher than our estimate. The company’s gross margin came in lower at 62.1%, lower than in the corresponding period of the previous year (at 65.1%). However, inspite of the same, on back of lower other expenses, the OPM came in at 23.1% vs 19.3% in 3QFY2012, and also higher than our expectation of 20.5%. The net profit grew only by 42.6% yoy for the quarter at Rs.335cr.

Outlook and valuation: We expect Lupin’s net sales to post a 19.3% CAGR to Rs.10,082cr and earnings to report a 27.2% CAGR to Rs.31.4/share over FY2012–14E. Currently, the stock is trading at 24.4x and 19.2x FY2013E and FY2014E earnings, respectively. We maintain our Accumulate recommendation on the stock with a target price of Rs.655.