Buy Lupin; target of Rs 2750: Emkay

Emkay's research report on Lupin

Lupin’s 2QFY25 EBITDA/Adj PAT were 18%/26% ahead of our estimates (the magnitude of beat was broadly similar vs street estimates). Gross margin and EBITDA margin (~24%, even adjusting for the spike in other operating income) were at multi-quarter highs (levels last seen in FY17). Growth in the domestic Rx business (~80% of domestic sales in 2Q, per our estimates) was marginally ahead of expectations with the India sales beat being driven by other verticals (which are margin-dilutive). US sales miss was a marginal negative even as we expect a reversal with the full impact of the launch of Mirabegron 50mg and gPred Forte expected to flow through in 3Q. 2Q performance reinforces our belief in Lupin’s sharp margin expansion story and we expect consensus earnings to play catch-up. We retain BUY with a Sep-25E TP of Rs2,750.

Outlook

we expect consensus earnings to play catch-up. We retain BUY with a Sep-25E TP of Rs2,750.