Lupin reported a 1.1 percent fall in its fourth quarter net profit to Rs 547 crore as against Rs 553 crore in the corresponding quarter last fiscal. In an interview to CNBC-TV18, Abhishek Sharma, pharma analyst at IIFL, and Surajit Pal of Prabhudas Lilladher, analyse the results.
Below is the transcript of Abhishek Sharma and Surajit Pal’s interview with CNBC-TV18’s Latha Venkatesh, Anuj Singhal and Ekta Batra.
Latha: Disappointed with the numbers?
Pal: The result is disappointing from topline as well as bottomline. I believe margin is lower. I was expecting Celecoxib will be at least half of the quarter will be replacing their Authorized Generic (AG) product which was definitely much lower margin than their own product. From that perspective it could be the case that their AG product was still in the channel and that is why they could not push their own product. So, the benefit of their own Celebrex approval will be coming in Q1. I think that is the reason for all the issues.
Latha: So, postponement of revenues rather than actually missing?
Pal: Yes. Second point I think domestic they were pretty high growth, around 21 percent growth in 9 months. I was expecting lower than that around 15 percent. So, that could be one of the reasons which you were seeing year on year growthwise problem.
Anuj: What is your first take on the numbers? Clearly it looks like the US sales have disappointed on a high base albeit but both on the margin front and on topline front it looks like the number is a miss.
Sharma: It is a miss and just to add to what had been already discussed, I guess there are misses on revenues all around. There is a miss on the Japan business, India business, US we have discussed already, there is a miss on the rest of the world business. So, either we were building in great amount of expectation or there has been general slowdown for the company during this quarter.
Latha: Would you want to alter your even longer term expectations or will you hold back till you hear the management? Would you have new price targets, new valuations?
Sharma: We would of course wait to hear back from the management. This is one quarter so it obviously doesn’t make up the entire story. Lupin still has great number of first to file in the pipeline, the highest number of Para IV amongst the Indian companies. So, we remain bullish on that aspect. However we need to see what led to this miss today.
Anuj: The stock has corrected now 15 percent from the top but still remains quite expensive, how would you play the stock now?
Pal: Upside potential is pretty capped given the opportunity the company has. I think the most of the opportunity is pretty much known and reflected to a great extent in the price. So, I believe more of a time correction for the company unless they lead like say Sun Pharma corrected so these guys have followed like Dr Reddy’s, Lupin. So, they will be readjusting accordingly. So, till the time Sun Pharma holds the valuation at current levels I don’t think much of disruption in the value of Lupin.
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