LUPIN

Broking Firm: Motilal Oswal Price at the time of

Recommendation: Rs 630

Target Price: Rs 957

Rationale:

Lupin���s 2QFY09 results were above our estimates. Key highlights: Net sales grew by 42% to Rs 9.3 billion (against estimates of Rs 8.3 billion ), while adjusted PAT grew by 53% to Rs 1.15 billion (against estimates of Rs 956 million). Organic top-line growth (excluding Kyowa & Rubamin acquisitions) was 18%. EBITDA margins expanded by 200 bp to 19% (against estimate of 18%) led by better product-mix and currency depreciation.

Lupin has a track record of launching low-competition IPR driven products in the US during the past few years. We expect this trend to continue.

Lupin may witness a gradual improvement in the underlying fundamentals led by an expanding US generics pipeline, niche/Para-IV opportunities in the US, strong performance from Suprax (branded product in US) and ramp-up in formulation revenues from its European initiative .

We expect the company to record EPS of Rs 49.7 and Rs 63.8 for FY09 and FY10 respectively . Given the strong earnings growth, valuations at 12.7x FY09E and 9.9x FY10E consolidated earnings are attractive . Thus, we reiterate a ���Buy��� for the stock.

Closing price on Monday, November 3, 2008: Rs 671