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Lupin 3QFY2014 performance highlights and results update

February 4, 2014, Tuesday, 17:09 GMT | 12:09 EST | 21:39 IST | 00:09 SGT
Contributed by Angel Broking


For 3QFY2014, Lupin‘s results came just in line with our expectations on the top-line front, while the OPM and net profit came much above expectations. The company posted sales of Rs.2,983cr, posting a yoy growth of 21.0%. Its OPM expanded by 151bp yoy during the period to 24.6% vs our expectation of 23.4%. Thus, the net profit came in at Rs.476cr (vs an expected Rs.425cr), posting a yoy growth of 42.0%. We recommend an Accumulate rating on the stock with a price target of Rs.1,007.
 
Better-than-expected net profit growth: Lupin’s results came just in line with our expectations on the top-line front, while the OPM and net profit came much above our expectations. On the sales front, the company posted sales of Rs.2,983cr, posting a yoy growth of 21.0%. The growth was predominantly led by the exports formulation business, which grew by 23% yoy, while domestic formulations grew by 14% yoy. The company’s OPM expanded by 151bp yoy during the period to 24.6% (vs our expectation of 23.4%). This along with reduction in interest expenses aided the PBT to register a yoy growth of 33.0% to Rs.738cr. Thus, the net profit came in at Rs.476cr (vs an expected Rs.425cr), posting a yoy growth of 42.0%.
 
Outlook and valuation: We expect Lupin’s net sales to post a 26.6% CAGR to Rs.13,855cr and earnings to report a 28.9% CAGR to Rs.48.8/share over FY2013–15E. Currently, the stock is trading at 23.1x and 18.9x FY2014E and FY2015E earnings, respectively. We recommend an Accumulate on the stock.