Lupin faces near-term profitability pressure from intensifying competition in the US market, particularly in Mirabegron and Tolvaptan, according to brokerages Jefferies and Kotak. While Jefferies expects US sales to decline and has cut its earnings estimates, Kotak expects the India formulations business to outperform industry growth. Both brokerages see potential from respiratory generics, biosimilars, and other product launches, although a meaningful recovery from these launches is expected to take time.
Lupin Q2 Results: Key Highlights (Cons, YoY)
- Net profit declined 21.8% YoY to Rs 1,155 crore from Rs 1,478 crore.
- Revenue increased 11.1% YoY to Rs 7,827 crore from Rs 7,048 crore.
- Ebitda declined 8.5% YoY to Rs 2,044 crore from Rs 2,341 crore.
- Ebitda margin contracted to 26.1% from 33.2% YoY.
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Brokerage Views
Jefferies: Maintains Underperform
- Jefferies has cut its target price to Rs 1,750 from Rs 2,050.
- US sales are expected to decline as competition intensifies for Mirabegron and Tolvaptan.
- Key respiratory, injectable, and biosimilar launches are unlikely to contribute meaningfully before FY29.
- The brokerage has cut its FY27 and FY28 EPS estimates by 5% and 1%, respectively.
- Jefferies maintains its FY27 Ebitda margin guidance of 24% to 25%.
Kotak: Maintains Add
- Kotak has maintained its target price at Rs 2,335, with Add rating.
- India formulations are expected to outperform industry growth by 1.2-1.3 times.
- Competition in Tolvaptan and Mirabegron in the US market is expected to pressure near-term profitability.
- Respiratory generics, biosimilars, and Ellipta launches could drive a stronger recovery from FY30.
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