Lupin - Q1FY21 Result Update - ICICI Securities

Q1FY21 revenues fell 20.2% YoY to Rs. 3528 crore (I-direct estimate: Rs. 3707 crore) mainly due to Kyowa divestment and due to 21.1% YoY decline in US revenues to Rs. 1216 crore. Domestic formulations sales also stayed subdued de-growing 1.7% YoY to Rs. 1285 crore. However, API segment grew a robust 17.2% YoY to Rs. 409 crore. EBITDA margins contracted 566 bps YoY to 13.8% (I-direct estimate: 13.5%) due to lower gross margins and higher employee cost. EBITDA de-grew 43.3% YoY to Rs. 488 crore (I-direct estimate: Rs. 500 crore). Net profit was at Rs. 107 crore, down 64.7% YoY (I-direct estimate: Rs. 182 crore) in line with lower operational performance and higher tax rate.

Valuation & Outlook

Q1FY21 results were subpar with revenues below I-direct estimates mainly due to a weaker-than-expected US performance, although operational performance was in line mainly due to some situation based cost savings. As per the management, FY21 US sales would be largely driven by gLevothyroxine, gProAir and 15+ new launches. Domestic branded formulations are expected to remain stable. Structurally, the resolution of warning letter and clearance of official action indicated (OAIs) status on plants could be the near term lever along with progress on margins front. Like other pharma majors, Lupin has also chalked out a product, cost rationalisation drive. The result of this drive could be visible two to three years down the line. We believe the performance can only improve from here on with some high profile launches and cost control measures. We upgrade the stock to BUY and arrive at our target price of Rs. 1030 based on 26x FY22E EPS of Rs. 39.7.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Lupin_Q1FY21.pdf

Shares of LUPIN LTD. was last trading in BSE at Rs.957.95 as compared to the previous close of Rs. 957.85. The total number of shares traded during the day was 157896 in over 5872 trades.

The stock hit an intraday high of Rs. 969.05 and intraday low of 945.5. The net turnover during the day was Rs. 150999368.

Source : Equity Bulls

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