Lupin falls on lower sales guidance for FY16

MUMBAI: Shares of Lupin extended intraday decline and fell 3.96 per cent after the company cut its sales guidance for FY16. The management has said it won’t be able to meet 10-15 per cent sales guidance. Moreover, the launch of gNexium is likely to be delayed to Q4. The stock has fallen over 15 per cent in four trading sessions.

The stock ended the day 3.27 per cent lower or Rs 56.6 at Rs 1,672.

S Ramesh, Chief Financial Officer, Lupin in an interview to ET Now said, the April- June has been muted in terms of growth and will be impacted due to delays in approvals by USFDA.

He expects growth to be much better in H2 vs H1 this year. US sales contribute 45 per cent of Lupin’s total revenues.

Ramesh doesn’t see any stoppage of production from its Goa facility as the observations at the Goa plant have already been resolved.

The company has been facing issues in the US market due to slowdown in USFDA approval. It has impacted its Q1 results as well. Lupin disappointed the Street with Q1 results on both net profit and revenues front.

"Slowdown in approvals in the US dampened growth during the quarter, even as the Company continues to improve on gross margins. We remain focused on evolving our research pipeline, ensuring compliance, operational excellence and acquiring meaningful assets,” said Nilesh Gupta, Managing Director, Lupin.

Kotak Institutional Equities has maintained ‘Reduce’ rating on the stock with a target price of Rs 1,650.

“Lupin missed estimates in its 1QFY16 results, had a 483 issued at its flagship Goa facility and announced the acquisition of Gavis Pharma for US$880 mn,” the report said.

“While we expect FY2016 numbers to continue to disappoint, Gavis seems to be the right strategic fit given the deep, multi-dosage form pipeline, though we see valuations as steep though it might be EPS accretive from FY2016. Maintain REDUCE,” it added.