Lupin hit by drug pricing; biz did well globally: Angel

Sarabjit Kour Nangra of Angel Broking believes that India’s drug pricing policy impacted Lupin's earnings for June quarter. The pharmaceutical major posted a 43 percent net profit year-on-year (YoY), but revenues rose lower-than-expected 10 percent YoY.

However, the company has performed well internationally, especially in US and Europe by posting a growth of 30 percent, Nangra told CNBC-TV18. So, one should keep international and not domestic performance as the parameter to judge the company, she says. An EPS of Rs 35 for the current year is expected out of the business, she adds. Also read: Lupin Q1 net up 43%, revenues rise lower-than-expected 10% Below is the edited transcript of his interview to CNBC-TV18. Q: The market is punishing Lupin for 10 percent sales growth. What is your first take on the number? A: The numbers are disappointing. On the prima facie, the nine percent top-end growth has come. They have curtailed the expenses well during the quarter which has led to margin expansion in the bottomline. If you look at the numbers closely, the key geographies have done fairly well during the quarter. US and Europe, which is almost 50 percent of the market, has done fairly well at 30 percent growth. India has not done that great and the reasons are mostly due to the pricing policy.  Overall, if you look deeper into the numbers, they are enthusing. It is just that the expectation has become higher in case of Lupin. The stock will react this way on Wednesday. Possibly once all the numbers are taken into a proper consideration, the stock will stabilise. Q: Will you be able to give this kind of a profit run rate for the full year as well while revenues are slower at 10 percent compared to their normal record of 15 percent? Profit is not doing too badly at all. What will you give them by way of a year-end EPS? A: Our numbers have been fairly consecutive in comparison to the kind of operating performance the company is delivering. We are looking at an EPS of around Rs 35 for the current year, which they can easily beat the expectations. So matching up the numbers is not going to be difficult one. In this quarter, like most of the pharmaceutical companies, one should look excluding domestic and that should be the parameter for evaluating the performance of pharma companies. Currently, these domestic numbers are being impacted by something which is macro in nature. So probably we will have to give credence to that and look at the numbers.