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Centrum Broking
Lupin (Add)
Target: ₹1,075
CMP: ₹1,072
Lupin Q3-FY21 numbers ahead of our estimates largely due to improved margins and one- time benefits contributing along with lower ETR (15%). EBITDA margins were benefited by product mix, lower freight rates and lower staff costs. Along with lower forex losses and lower R&D spend kept the other expenses lower.
The revenue growth of 5 per cent y-o-y was driven by India and US sales while rest of the markets supported with growth recovery. The US revenues were below our estimates as weakest flu season in US impacted the sales recovery. gAlbuterol continues to drive the US sales base, with current market share at 9 per cent.
We believe most of the niche launches would be in late FY22 and FY23. We have reduced estimates our FY21/22 by 3 per cent/11 per cent respectively and we roll over to FY23. Also, complex injectables and biosimilars filings including higher expected number of filings in FY22 would push the R&D costs higher. higher. Management has guided for 9 per cent R&D spend for FY22E.
The growth recovery in India and other markets would continue to support earnings in FY22. Also, compliance clearance for the OAI status plants should see positive resolution at-least in H2-FY22.
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