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Systematix Research Report
Lupin Ltd.'s revenue (Rs 55,143 million) and net earnings (Rs 8,013 million) were significantly higher than expectations - 7.2% and 42 % higher respectively. India formulation and North America were the key growth drivers. India growth was 17.5% YoY and was led by a lumpy opportunity (institutional supplies) and hence the growth in subsequent quarters should taper off.
North America grew 7% QoQ versus our expectations of low single digit growth. Higher than expected contribution from new launches (Mirabegron, gOracea and gProlensa) helped the outperformance in North America.
Going forward in subsequent quarters, we expect North America revenue run rate to inch up from current levels led by new launches. Gross margins were higher 51 basis points QoQ potentially led by the new limited competition launches.
Ebitda margins came in stronger led by a improvement in gross margins and lower research and development spend (6.2% of sales). The company expects to sustain gross margins at current levels. Erosion in gSuprep sales offset some of the gains from new launches. Based on our revised forecasts we expect Lupin to deliver revenue /Ebitda / profit after tax compound annual growth rate of 9.8% / 16.9% / 29.3% respectively over FY24-FY26E.
While we raise our EPS forecasts for Lupin, we reduce our target PE multiple to 20 times to arrive at a target price of Rs 1,397 and maintain our rating as Sell.
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