Lupin - Q21FY21 Result Update - ICICI Direct

Q2 revenues declined 12.0% YoY to Rs. 3835 crore (I-direct estimate: Rs. 3714 crore) mainly due to Kyowa divestment. US revenues grew 5.6% YoY to Rs. 1398 crore whereas domestic formulations remained subdued de-growing 0.7% YoY to Rs. 1332 crore. RoW markets remained flat at Rs. 351 crore. However, API segment grew a robust 22.5% YoY to Rs. 374 crore. EBITDA margins contracted 164 bps YoY to 15.2% (I-direct estimate: 15.5%) due to lower gross margins and higher other expenses. EBITDA de-grew 20.6% YoY to Rs. 581 crore (I-direct estimate: Rs. 576 crore). Adjusted PAT was at Rs. 211 crore, down 49.7% YoY (I-direct estimate: Rs. 249 crore), in line with lower operational performance, lower other income and higher tax rate.

Valuation & Outlook

Q2FY21 revenues and operational performance were in-line with I-direct estimates while profitability was below expectations due to below expected other income and a higher tax outgo. As per the management, FY21 US sales would be largely driven by gLevothyroxine, gProAir ramp-up 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. We expect the performance to improve gradually from here on with some high profile launches and cost control measures. However, the progress, especially on the margins front, is still slow. Till some meaningful traction happens on margins front, further upside seems limited at this juncture. We downgrade the stock to HOLD and arrive at our target price of Rs. 985 based on 22x FY23E EPS of Rs. 44.8.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Lupin_Q2FY21.pdf

Shares of LUPIN LTD. was last trading in BSE at Rs.916.4 as compared to the previous close of Rs. 935.95. The total number of shares traded during the day was 137345 in over 4587 trades.

The stock hit an intraday high of Rs. 944.8 and intraday low of 912.85. The net turnover during the day was Rs. 127029074.

Source : Equity Bulls

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