Buy Lupin, target Rs 1800: Karvy

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Buy Lupin, target Rs 1800: Karvy

Karvy Stock Broking Ltd has retained its outperformer rating on Lupin, with price target of Rs 1800, in its report dated February 4, 2010.

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Karvy Stock Broking Ltd has retained its outperformer rating on Lupin , with price target of Rs 1800, in its report dated February 4, 2010.

Revenues for Q3FY10 increased (+29.2% y-o-y) to Rs.12707.8 mn higher than our expectation of Rs 11859.7 mn primarily due to strong growth in sales in US (+42.4% y-o-y), Japan (+12.8% y-o-y) and Europe (+61.4% y-o-y). OPM for Q3FY10 was recorded at 20.6%. Net profit during the quarter was reported at Rs 1606 mn compared to our expectation of Rs.1520.2 mn primarily due to strong operating performance reported during Q3FY10.

We revise our FY 2010E and FY 2011E revenue numbers by 5.3% to Rs 48.4bn and by 6.2 % to Rs 58.8 bn on back of greater traction in domestic formulations and Antara launch, coupled with 10 launches in US markets including 3 niche launches in FY 11E. We have also factored ramp up in revenues on higher base in Japanese markets. We continue to amortise goodwill on account of acquisitions to the tune of Rs 317 mn for FY 2010E and FY 2011E. We upgrade our FY 2010E EPS by 9.4 % to Rs 73 for FY 2010E and by 1.3% to Rs 93.4 for FY 2011E. We upgrade our price target by 2.3% to Rs 1,800 based on 19.3x FY 2011E. We maintain our Outperformer rating on the stock.

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To read the full report click on the attachment