Overweight on Lupin, target price Rs 2,600: Axis Securities

Axis Securities has an overweight call on Lupin with a target price of Rs 2600. The current market price of Lupin is Rs 2160. Lupin, incorporated in 1983, is a Large Cap company with a market cap of Rs 99094.85 crore, operating in the pharmaceuticals sector.

Lupin's key products/revenue segments include Pharmaceuticals, Other Services, Export Incentives, Other Operating Revenue and Scrap for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 5715.02 crore, up .83% from last quarter Total Income of Rs 5668.11 crore and up 12.52% from last year same quarter Total Income of Rs 5078.96 crore. The company has reported net profit after tax of Rs 859.48 crore in the latest quarter.

The company's top management includes Mrs.Manju D Gupta, Mr.Jeffrey Kindler, Mr.Jean-Luc Belingard, Dr.Punita Kumar-Sinha, Mr.Mark D McDade, Mr.Ramesh Swaminathan, Ms.Vinita Gupta, Mr.Nilesh D Gupta, Mrs.Manju D Gupta, Mr.Alfonso Zulueta, Mr.Jeffrey Kindler, Mr.Jean-Luc Belingard, Dr.Punita Kumar-Sinha, Mr.Mark D McDade, Mr.Ramesh Swaminathan, Ms.Vinita Gupta, Mr.Nilesh D Gupta, Mr.Alfonso Zulueta. Company has B S R & Co. LLP as its auditors. As on 30-09-2024, the company has a total of 46 Crore shares outstanding.


Investment Rationale

New launches in the US market like Darunavir and Spiriva have gained market shares of up to 30% and 25% respectively. The recent launch approval of gMegabran has the potential to add yearly incremental sales of $50 million. Recent approvals for Tolvaptan (market size $287 million) and Xyway (market size $958 million with 180 days exclusivity, could add business in the second half. The company has a strong pipeline of products including Cynocobalamin, Diazepam Gel, Vereniciline, Bromfenac, Glucagen, and Risperidone, among others. Double-digit growth in the India business is expected as the company has already increased MR (Medical Representative) numbers to 1,000. An uptick in the API (Active Pharmaceutical Ingredient) business, as the API industry is witnessing a demand revival. Lupin?s margins, currently at 18%, are still below the industry levels of 22%, which implies a significant scope for margin improvement in the upcoming quarters. This improvement will also be supported by the macro environment, which is currently favourable for the industry, such as falling raw material prices, low logistic costs, and fuel costs. At the CMP, the stock trades at 36.4x and 30.9x its FY25E and FY26E earnings.

Promoter/FII Holdings
Promoters held 46.96 per cent stake in the company as of 30-Sep-2024, while FIIs owned 21.5 per cent, DIIs 25.06 per cent.