Lupin Shares Rise After Brokerages Hike Target Price

Shares of Lupin Ltd. gained on Monday as brokerages raised their target price on the stock after its first quarter consolidated profit beat analysts' estimates.

The pharmaceutical firm's net profit rose to Rs 452 crore in the June quarter against a net loss of Rs 89 crore in the year-ago period, according to an exchange filing. That compares with the Rs 258 crore consensus estimate by analysts. Sequentially, profit surged by 92%.

Jefferies Financial Group Inc. increased its earnings-per-share estimates by 25–28% for FY24–26, given the positive results, the anticipated gSpirivia launch, and favorable pricing dynamics for generic drugs in the U.S.

Shares of the pharma company rose 2.01% to Rs 1,085.35 apiece, compared to a 0.3% advance in the benchmark NSE Nifty 50 as of 10:33 a.m. The stock has gained 2.89% to hit an intraday high of 1,094.70.

Out of the 41 analysts tracking Lupin, 12 maintain a 'buy' rating on the stock and as many recommend a 'hold', while 17 suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 16.1%.

Key Highlights From Brokerage Notes

Jefferies

• Maintains 'buy' rating with a revised target price of Rs 810 from Rs 610.

• The stock has rallied over 25% since the approval of gSpiriva in June.

• GSpiriva's addressable market size is estimated to be $1 billion, according to Lupin.

• GSpiriva sales to be $36/117 million for FY24/25 with a 70% Ebitda margin.

• Quarter 1 revenue of Rs 4,810 crore was 9% above brokerage estimates.

• Quarter 1 Ebitda was 25% above estimates; excluding the one-time royalty income. Ebitda beat estimates by 15%.

• India's business grew 10.8% YoY to Rs 1,630 crore, led by strong performance in the respiratory, cardiac, and diabetes segments.

• North America sales grew 3% QoQ to $181 million, led by gSuprep and gPrezista, for which Lupin owns exclusivity on 800mg.

• Three–four launches are expected from the company's Indore Unit-2 plant, which recently cleared warning letter status.

• Lupin's guides for 18% core Ebitda in Q4 and expects FY25 Ebitda margin to exceed FY24 levels.

• Lupin trades at expensive PE valuations of 29x/24x FY25/26 core EPS.

DAM Capital

• Upgrades to 'buy' rating at target price of Rs 1,237, which is a 16% upside to the current market price.

• Estimates a 17–18% Ebitda margin by FY25 due to low yield on cost-containment efforts.

• Q1 included a one-time NCE milestone income of $25 million.

• India's sales of Rs 1,640 crore were above estimates, while US sales of $181 million were below brokerage estimates.

• Company had positive news flow over the last few months: approval of gSpiriva, launch of gPrezista and improvement in US generics outlook.

• Non-US exports seem to be rebounding.

• Estimated margin to drive estimated 3x Ebitda and 5x net profit growth over FY23–26.

• Company guidance states that it is looking to build a large injectables business with an upside of $100 million per year over the next few years.