Comments
Emkay Global
Lupin (Buy)
Target: ₹1,150
CMP: ₹923.8
We retain our ‘Buy’ rating on the stock but lower the target price to ₹1,150 from ₹1,300 as we cut our earnings estimates by 14 per cent/5 per cent/5 per cent for FY22/23/24 to reflect the reset in profitability expectation. Lupin has lowered its EBITDA margin guidance for H2FY22 to about 16 per cent from 17-18 per cent earlier.
Revenue beat our estimates by 3 per cent, driven by higher-than-expected revenue in the US business amid a ramp-up in its respiratory portfolio. EBITDA missed our estimates by 3 per cent due to a change in the business mix, higher RM costs and lower API margins.
Lupin has reaffirmed US revenue ramp-up guidance to $200 million per quarter in H2FY22. Beyond FY22, management expects high-value product launches such as Spiriva, Suprep and Pegfilgrastim. Lupin has retained EBITDA margin aspiration of 20 per cent+, but the timeline is not clear.
Valuation is compelling as we believe the company’s strong India business roughly accounts for 90 per cent of the current market cap and the rest of the business is virtually free.
Catalysts: High-value product approval, plant clearance and cost savings.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.