Lupin Ltd. share price target

LPC delivered a healthy operational performance in Q4 with largely in-line revenue/PAT; higher tax impacted net profit

Lupin reported a mix set of earnings where sales were 4% below our estimates at Rs. 4,895 crore. EBITDA was 4% below our estimates at Rs. 997 crore, while adjusted PAT was in-line with our estimate of Rs. 561 crore.

Niche product approvals and a strong pipeline of new drugs could drive Revenue/PAT CAGR by 10%/19.5% over FY24E-FY26E. We maintain our BUY rating with a Target Price of Rs 1,770/share.

Lupin has recently received approval for a generic version of Oracea (Doxycycline Capsules) in the US market. The company has received approval for 40MG in the US, which is expected to have sales of $128 million in the US market. Lupin has a healthy pipeline of complex generic products in the US market which would aid the company in achieving quarterly US sales of $200-220 million.

Lupin reported revenue growth of 20.2% YoY (+ 3.2% QoQ) to INR 51,974 Mn (vs our estimate of Rs. 49,064 Mn) in Q3FY24. It was driven by 21.2% YoY (+2.8% QoQ) increase in Formulations’ revenue (~94.5% of revenue) and a 1.3% YoY (+3.5% QoQ) decline in API revenue (~5.5% of revenue).

Strong Q3 with EBITDA/PAT of Rs 10.2bn/Rs 6.1bn, beating consensus by 17%/42%

Double-digit growth in India business as the company has already increased MR numbers to 1,000, 4) An uptick in the API business as the API industry is witnessing demand revival. Recommendation: BUY