Earnings Outlook
Strong US, India ops to boost Lupin's Jul-Sept performance
This story was originally published at 12:00 IST on 6 November 2024
Register to read our real-time news.Informist, Wednesday, Nov. 6, 2024
By Apoorva Choubey
MUMBAI – Strong sales from the U.S. business, recovery in prices of generic drugs and robust revenue growth in the Indian operations are likely to help Lupin Ltd. report double-digit growth in both bottom line and top line for the September quarter. However, the pace of growth in both these metrics is seen the lowest in at least five quarters, as the benefit of an extremely low base, seen over the past year or so, will be absent.
The city-based drugmaker's consolidated net profit for Jul-Sept is expected to surge 48.3% on year to INR 7.26 billion, according to the average of estimates from 14 brokerage houses. The lowest projection for the net profit was brokerage Nuvama Wealth Management's INR 6.4 billion, while the highest was INR 8.5 billion, estimated by Antique Stock Broking.
During Jul-Sept, Lupin's consolidated net sales are seen rising 10% from a year ago to INR 55.6 billion. The projections for the top line ranged from INR 54.1 billion to INR 57.2 billion.
Growth is expected to be led by the high-margin North American business, which largely comprises the U.S. operations. The region is the most important market for Lupin as it accounts for around 38% of the total revenue pie, and is deemed to be a bigger contributor to overall profitability.
For Jul-Sept, the company's US sales are seen in the range of $220 million–$245 million, up from $213 million a year ago. The projections for the US sales are in a broad range presumably because analysts differ in the assumptions for sales of Lupin's key products such as urinary control drug Mirabegron.
Price recovery, strong traction in niche products such as asthma medication Spiriva and new launches like Mirabegron are seen driving Lupin's US sales during Jul-Sept. The drugmaker, earlier this year, had guided for a quarterly revenue run rate of over $200 million in the U.S.
The growth in high-margin U.S. sales and new launches will lead to a better product mix for the company, in turn, boosting the profitability for the September quarter, according to analysts. Operating margin, defined as earnings before interest taxes, depreciation and amortisation, is expected to widen 276-360 basis points from 18.2% a year ago.
The other big market for the company, India, may see 9-12% on-year growth in sales during Jul-Sept, likely driven by the chronic therapy portfolio, complex drug launches and higher field force activity, said analysts. The region accounts for around 34% of the company's overall topline.
On a quarter-on-quarter basis, net profit is seen over 9% lower while net sales may fall nearly 1%. At 1015 IST, the company's shares were trading flat at INR 2,188.80 on the National Stock Exchange.
When the company details its earnings on Thursday, investors will watch out for comments on demand, revenue guidance, product pricing environment, new launch pipeline and operating costs in the backdrop of challenging macroeconomic conditions. The company expects to grow the US business in high single digits during 2024-25 (Apr-Mar). For the medium-term, 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.
Following are the Jul-Sept earnings estimates for Lupin from 14 brokerage houses:
| Brokerage Name | Net Sales (INR million) | Net Profit (INR million) | EBITDA (INR million) |
| Antique Stock Broking Ltd | 57,194.00 | 8,459.00 | 13,574.00 |
| Axis Securities Ltd | 55,500.00 | 7,000.00 | 12,000.00 |
| Elara Securities (India) Pvt Ltd | 56,731.00 | 7,298.00 | 12,177.00 |
| HDFC Securities Ltd | 55,491.00 | 7,153.00 | 11,820.00 |
| Kotak Institutional Equities | 54,793.00 | 6,698.00 | 11,493.00 |
| KR Choksey Research | 55,453.00 | 7,188.00 | 11,893.00 |
| Motilal Oswal Financial Services Ltd | 54,523.00 | 6,872.00 | 11,559.00 |
| Nomura Equity Research | 54,994.00 | 7,648.00 | 12,078.00 |
| Nuvama Wealth Management Ltd | 54,047.00 | 6,431.00 | 11,350.00 |
| PhillipCapital (India) Pvt Ltd | 55,313.00 | 7,417.00 | 12,384.00 |
| Prabhudas Lilladher Pvt Ltd | 56,149.00 | 7,776.00 | 12,660.00 |
| Sharekhan Ltd | 56,560.00 | 7,130.00 | |
| Systematix Shares and Stocks (India) Ltd | 56,424.00 | 8,020.00 | 12,780.00 |
| YES Securities (India) Ltd | 55,139.00 | 6,557.00 | 11,002.00 |
| Average | 55,593.64 | 7,260.50 | 12,059.23 |
End
US$1 = INR 84.19
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bhardwaj
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.
To read more please subscribe
Share this Story:
