Q3FY21 Result Update - Lupin - ICICI Direct

Q3 revenues grew 6.6% YoY to Rs. 4017 crore (I-direct estimate: Rs. 3961 crore). US revenues grew 4.8% YoY to Rs. 1442 crore whereas domestic formulations grew 5.4% YoY to Rs. 1367 crore. ROW markets remained flattish at Rs. 437 crore. API segment grew 8.4% YoY to Rs. 344 crore. EBITDA margins improved 797 bps YoY to 19.4% (I-direct estimate: 16.5%) due to better gross margins amid ramp-up of complex generics segment and better operating leverage owing to cost control measures. EBITDA grew 81.0% YoY to Rs. 779 crore (I-direct estimate: Rs. 654 crore). Adjusted PAT was at Rs. 438 crore, up 258% YoY. Delta vis-a-vis EBITDA was due to lower interest cost and tax rate.

Valuation & Outlook

Q3FY21 revenues were in-line with I-direct estimates whereas profitability was above expectations due to better gross margins, cost control and a lower 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. 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. However, 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. Together, these two factors (niche launches and cost rationalisation) are likely to overcome regulatory pains. We upgrade from HOLD to BUY and arrive at our target price of Rs. 1165 (vs. Rs. 985 earlier) based on 25x FY23E EPS of Rs. 46.6.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Lupin_Q3FY21.pdf

Shares of LUPIN LTD. was last trading in BSE at Rs.1007.75 as compared to the previous close of Rs. 1050.25. The total number of shares traded during the day was 265904 in over 13269 trades.

The stock hit an intraday high of Rs. 1060 and intraday low of 995.7. The net turnover during the day was Rs. 270308990.

Source : Equity Bulls

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