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Centrum Broking
Lupin (Buy)
CMP: ₹763.2
Target: ₹930
We maintain ‘Buy’ rating on Lupin with a target price of ₹930 (earlier ₹1,050) based on 23x March 2020 EPS of ₹40.4. Lupin’s Q4FY18 results were lower than our and consensus estimates due to pricing pressure in the US generic market. Lupin’s revenue declined 5 per cent y-o-y, margin declined 80 bps to 17.6 per cent, and net profit before EO (executive order) item grew by 80 per cent.
The pricing pressure in the US has eased out due to discontinuation of several generic products by Teva and Sandoz. We believe the company’s robust growth across key markets coupled with its strong pipeline of 163 pending ANDAs with US FDA will drive future growth.
The key positive risk to our assumptions would be strong growth in the US market and the key negative risk would be slower growth in the domestic market.
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