Shares of Lupin have been on a slide for the fourth successive day on the bourses. The slide got aggravated on Thursday after the company posted lower-than-expected earnings for the fourth quarter ended March 31 on Wednesday.
The stock on Thursday closed at ₹1,632.80, down 3.42 per cent on the BSE. During the day, it slipped 5.98 per cent to ₹1,589.40. Since May 8, the stock has tumbled 7.8 per cent.
The company on Wednesday reported over 1 per cent decline in consolidated net profit at ₹547 crore for the fourth quarter ended March 31, hit by price erosion in the US and delay in product approvals. It had posted a net profit of ₹553 crore in the January-March period of the previous fiscal.
For the entire fiscal ended March 31, Lupin reported 30.86 per cent increase in consolidated net profit at ₹2,403.24 crore, compared with ₹1,836.37 crore in 2013-14.
Karvy recommended a ‘Sell’ on the shares with a price target of ₹1,680. “We downgrade our revenues by 6.3 per cent and 7.3 per cent for fiscal 2016 and 2017 on the back of lower US, Japan and RoW (rest of world) revenues,” according to Rahul Sharma of Karvy.
Kotak Securities has reiterated its ‘reduce’ recommendation with a price target of ₹1,650 on Lupin, as the results fell short of its estimates on the back of a third straight miss for its US generics division. The latter underperformed expectations as prices for Cymbalta and Niaspan took a hit, impacting the base comparison with channel consolidations and triggering a re-negotiation of prices, Kotak said, and added “pressures on Lupin’s US business will mount in the coming quarters with new competition in Suprax and delays to key launches such as Nexium and Welchol.”
Long-term prospects intactThough disappointed with the numbers, Elara Securities said, “While near-term organic growth is likely to be moderate, we remain optimistic on the company’s long-term prospects, given its investment in developing future pipeline. Management is investing aggressively in developing rich pipelines in dermatology, injectables, controlled substances and bio-similars, the benefits of which are expected from FY18.”
Elara, which reiterated its ‘accumulate’ rating with a price target of ₹1,882, added, “In the near term, the company will benefit from a buoyant performance in India and launches in the US (pipeline of 99 ANDAs pending approval, including 34 FTFs).