Pharmaceutical company Lupin beat street expectations with third quarter (October-December) net profit rising 42 percent, driven by strong business growth in the US.
Net profit increased to a record level of Rs 476.1 crore as against Rs 335.2 crore in same quarter last year while revenue grew 20.8 percent year-on-year to Rs 3,022 crore in the quarter gone by.
Ranjit Kapadia, Senior VP - Pharma - Centrum Broking says the firm’s numbers are very good on the top-line and margins front. Bottomline growth too was commendable, he adds. According to him, except for the Japan business, Lupin has posted very strong third quarter numbers.
Below is the verbatim transcript of Ranjit Kapadia's interview with Ekta Batra on CNBC-TV18
Ekta: What is your first take on Lupin's Q3 numbers? Much better than what the street was working with?
A: Results are much better than expected. We were expecting about 14 percent top-line growth. Growth has come by about 21 percent that is mainly because of strong growth in US as well as in the domestic market. We were expecting about 11 percent growth in the domestic market which came at about 14 percent. So overall the numbers are really good on the top-line and the margin front they have done exceedingly well. Despite the problems in the domestic market they were able to restore margin of about 25.9 percent which is commendable and bottom-line growth is very strong at 42 percent, almost double than the top-line growth of 21 percent.
Ekta: What has led to this extremely strong EBITDA beat as well as revenue performance this time from Lupin? The street was worried about a high base effect and maybe a lower tax rate this quarter. So what has led to this extremely strong beat in the EBITDA?
A: One is domestic market with growth rate of 14 percent which is more than three-tens the industry growth of about 5 percent, about 2.5 times the industry growth of about 5-6 percent. Going further domestic market margins might have improved because they would be able to deliver much stronger growth.
Ekta: What about the US business? It has grown 31 percent this quarter to Rs 1,356 crore. Is this better than what you were working with?
A: Yes, my number was about Rs 1,280 crore, so it is much better than our expectations and overall the growth is good except for Japan which is lagging otherwise overall it is very good set of numbers.
Ekta: What would your call be in terms of any sort of incremental EPS upside? Would you be changing your call on it?
A: Not much. Our target price is Rs 1,200 and we will be reworking the numbers.
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