Lupin Ltd. share price target

Lupin has corrected by ~16% over the last one month due to worries on 483 (regulatory) observations by USFDA on Mandideep and Goa facilities and smaller-than-expected Glumetza pricing and revenues. Management has clarified that 483 observations on Mandideep are benign and unlikely to materially impact the business.

Mandideep based API & Formulations facility received 4 form 483 observations post inspection by US FDA in Feb-16. One observation is related to use of non-confirming intermediate for making API prior...

For 3QFY2016, Lupin posted results more or less in line with our expectations. A higher than expected other income aided the net profit to come in higher than our expectation. The company posted sales of Rs3,358cr (V/s Rs3,400cr expected), a growth of 6.8% yoy. On the operating front, the OPM came in at 20.2% (V/s 20.5% expected) V/s 27.0% in 3QFY2015. R&D; expenditure during the quarter was 11.7% of sales V/s 8.3% of sales in 3QFY2015. The net profit came in at Rs530cr (V/s Rs469cr expected) and V/s Rs601cr in 3QFY2015, a yoy dip of 11.9%. The higher than expected PAT is on back of higher other income yoy, which came in at Rs263cr V/s Rs116.1cr in 3QFY2015. Overall, we are Neutral on the stock. Results below expectations: For 3QFY2016, Lupin posted results more or less in line with our expectations. A higher than expected other income aided the net profit to come in higher than our expectation. The company posted sales of Rs3,358cr (V/s Rs3,400cr expected), a growth of 6.8% yoy. On the operating front, the OPM came in at 20.2% (V/s 20.5% expected) V/s 27.0% in 3QFY2015. R&D; expenditure during the quarter was 11.7% of sales V/s 8.3%...

Background: Amongst the largest Pharma companies in domestic market with Net Sales of INR 112.9bn with a strong brand portfolio. R&D; cost is in excess of 8% of Sales. Exports account for 73% with Developed Markets (DM) at 58% and EM at 15%. Sales Mix: API - 10%, Domestic Formulations - 25%, DM Formulations - 56%, EM Formulations - 9%. Historically strong in anti-TB segment, has built expertise in fermentation based products and segments like...

With 20% QoQ growth in the US and high other operating income of Rs 2bn (against Rs 1.4bn in the second quarter and Rs 327mn in 3QFY15), Lupin reported 26.1% EBITDA margin, up 500bps sequentially. US sales shot up US$ 34mn QoQ, largely driven by Fortamet, aided by ramp-up in brands and seasonal Ceph sales.

Key highlights: Sales were 6% ahead of our/consensus estimates. US sales at US$ 208mn were7%aheadofourestimate.Ontheotherhand,thedomesticformulationsperformance was in line with expectations. Higher export incentives and higher contribution from...

Lupin's revenues increased 4.7% YoY to Rs 33.2 bn in Q2FY16 lower than our estimates of Rs 34.2 bn on back of de-growth in US and Japan business. Operating margins declined by 600bps YoY to 20.2% (lower than our estimate of 25.9%) due to lower gross margins, higher R&D, other expenses and staff cost. Net Profit de-grew by 35.1% YoY to Rs 4088 mn as against our estimates of Rs 5481 mn.

8 630bps negative margin surprise (mainly due to under performance in its most profitableoperationsofUSgenericsanddomesticformulations)ledto33%yoydecline inearnings(21%/27%belowour/consensusestimates)...