Earnings Outlook
Strong US ops to bolster Lupin's profits, margins
This story was originally published at 22:31 IST on 2 August 2024
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By Apoorva Choubey
MUMBAI – Lupin Ltd is expected to clock double-digit growth in earnings for the June quarter on the back of a robust performance of its high-margin US drug portfolio and healthy domestic sales. The drugmaker's consolidated net profit may jump up over 21% on year to 5.48 bln rupees in Apr-Jun, according to the average of estimates of 12 brokerage houses.
Estimates for the company's bottomline are in a broad range of 4.23 bln rupees to 6.23 bln rupees. Lupin's consolidated net sales are seen rising 8.6% from a year to 52.26 bln rupees, the estimates showed. The lowest sales estimate is 50.31 bln rupees and the highest is 57.53 bln rupees.
Some analysts said the earnings may not be fully comparable on a year-on-year basis, as the company had received a one-time milestone payment of $25 mln in Apr-Jun last year. Sequentially, net sales are seen 5.4% higher while the bottomline may jump up 52.5%.
The high-margin North American market, mostly comprising the US, is the most important region for Lupin as it accounts for around 39% of the total revenue pie but is deemed to be a bigger contributor to overall profitability. For Apr-Jun, the company's North American sales are seen in the range of $211 mln–$244 mln, a double-digit rise over the year-ago period.
Strong traction in niche launches such as Spiriva and new launches like Mirabegron are seen driving US sales, even as higher competition in Suprep may weigh on the overall revenue from the region, said analysts. The drugmaker expects to maintain a quarterly revenue run rate of $200 mln in the US with 10 new launches, including ophthalmological and injectable products, and scale-up of high-value respiratory drug Spiriva.
The growth in high-margin US sales and new launches will lead to a better product mix for the company, in turn, boosting the profitability for the June quarter. Operating margin, defined as earnings before interest taxes, depreciation and amortisation, is expected to expand 200-400 basis points from 17.8% a year ago.
The other big market for the company, India, may see 8-13% on-year growth during the June quarter, led by the core portfolio and higher field force activity, said analysts. The region accounts for 33% of the company's overall topline.
When the company details its earnings on Tuesday, investors will watch out for comments on demand, updated guidance, product pricing environment, new launch pipeline and operating costs in the backdrop of challenging macroeconomic conditions. At the time of detailing earnings for Jan-Mar, Lupin had guided for sales growth of 10% and over 20% operating margin for 2024-25 (Apr-Mar).
The company expects to maintain the run rate of over $200 mln quarterly US sales as it expects the core portfolio to be healthy and sees the 10 new launches in the current financial year offsetting competition pressure in existing products such as Suprep and Darunavir.
Lupin's aspiration is to clock $1 bln in US sales by 2025-26, with the help of launches of pancreatic hormone drug Glucagon and asthma medication Dulera. The company has said it will file for 11-15 new drug approvals in the US in the current financial year. Today, its shares closed 0.4% higher on the National Stock Exchange at 1,961.50 rupees.
Following are the Apr-Jun earnings estimates for Lupin from 12 brokerage houses, in million rupees:
| Brokerage Name | Net sales | Net Profit | EBITDA |
| Axis Securities Ltd | 52,250.00 | 6,090.00 | 10,510.00 |
| HDFC Securities Ltd | 52,741.00 | 5,973.00 | 10,970.00 |
| Incred Research Services Pvt Ltd | 50,640.00 | 5,861.00 | 10,537.00 |
| Kotak Institutional Equities | 52,205.00 | 6,232.00 | 10,611.00 |
| KR Choksey Research | 57,525.00 | 6,151.00 | 11,102.00 |
| Motilal Oswal Financial Services Ltd | 50,311.00 | 5,061.00 | 9,660.00 |
| Nirmal Bang Equities Pvt Ltd | 52,330.00 | 4,989.00 | 10,228.00 |
| Nomura Equity Research | 53,812.00 | 5,138.00 | 11,763.00 |
| Nuvama Wealth Management Ltd | 51,643.00 | 5,382.00 | 9,916.00 |
| Prabhudas Lilladher Pvt Ltd | 52,310.00 | 5,785.00 | 10,631.00 |
| Sharekhan Ltd | 50,740.00 | 4,860.00 | |
| YES Securities (India) Ltd | 50,623.00 | 4,234.00 | 10,646.00 |
| Average | 52,260.83 | 5,479.67 | 10,597.64 |
End
US$1 = 83.75 rupees
Edited by Ashish Shirke
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