Lupin Q1 Results Review - Extraordinary License Income Drives Earnings Performance: Systematix

Systematix Research Report

Lupin Ltd.'s Q1 FY24 earnings performance exceeded expectations led by extraordinary gains from milestone income (Rs 2050 million) on one of its out licensed new chemical entity molecule. India business also returned to double digit growth during the quarter and was above expectations.

The strong growth trend was led by recent sales force expansion and its diabetes portfolio returning to growth as the impact of therapeutic substitution and price correction has played out.

Lupin's U.S. business also turned around and became profitable during the quarter translating into a lower effective tax rate. The U.S. business growth momentum should get strong led by multiple launches – gSpiriva (end of Q2 FY24), gNascobal and gDiazepam.

In addition, some more limited competition approvals are also expected which should help growth in FY25, of which gGlucagon and gProlensa are notable.

We have tweaked our forecasts on Lupin to include these launches in our estimates. Based on our revised forecasts we assign a 22 times multiple on FY25E earnings per share to arrive at price target of Rs 899 and recommend a 'Hold' rating at current market price.

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