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Last Updated : May 15, 2019 01:07 PM IST | Source: Moneycontrol.com

Lupin Q4 preview: Net profit likely to fall, EBITDA margin to take a hit

Narnolia expects EBITDA margin to decline by 171 bps YoY to 15.9 percent in Q4FY19 on account of increased remediation cost related to inspection in Somerset and Mandideep facilities.

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Drug major Lupin is expected to report a fall in its March quarter earnings, according to research and broking firm Prabhudas Lilladher. It expects Lupin to report net profit at Rs 253.2 crore, down 62.8% year-on-year.

Net sales are expected to increase by 2.1 percent YoY (down 7.2 percent QoQ) to Rs. 4,061 crore. Earnings before interest, tax, depreciation and

amortisation (EBITDA) are likely to fall by 14.3 percent YoY (down 10.5 percent QoQ) to Rs. 560.1 crore.

Narnolia Financial Advisors expects revenue from US generics business to increase by 6 percent YoY to $212 million in Q4FY19 on account of gRanexa and Levothyroxine launch though the impact on sales will be lower this quarter as the drug was launched in the latter half of the quarter.

In the US branded business, the firm assumes the revenue to increase by 63 percent QoQ to $13 million based on the Solosec ramp up as the company is focussing on increasing the prescriptions.

The research firm expects India and APAC to grow by 14 percent and 5 percent YoY to Rs. 1097 crore and Rs 699 crore respectively. Going forward, it believes Japan will turn out be interesting market as the company has received PMDA approval for Etanercept.

Narnolia expects EBITDA margin to decline by 171 bps YoY to 15.9 percent in Q4FY19 on account of increased remediation cost related to inspection in Somerset and Mandideep facilities.

Morgan Stanley believes that earnings concentration risk has normalised and new product catalysts are in sight to revive earnings. It expects Rs 37.0 and Rs 49.7 EPS for FY20 and FY21 (a 52 percent two-year CAGR), which is 7 percent and 15 percent ahead of consensus.

The brokerage said key earnings drivers include complex products in developed markets, steady growth in emerging markets and tight cost control, which together should drive up margins.

According to Kotak Institutional the US business is likely to grow USD50 million QoQ, given Ranexa exclusivity, and supported by a stable base business as well as Tamiflu contribution. It also includes USD 3 million QoQ growth in Solosec. The firm expects the domestic business to grow 14% YoY, South Africa and Europe to grow 10% and 8% yoy respectively, and Japan to grow 7%.

Kotak expects EBITDA margins (excluding licensing income in 3QFY19) to expand by 430 bps qoq to ~17%, driven by US scale-up, particularly, Ranexa exclusivity. EPS likely to jump 112% QoQ, though, yearly EPS numbers are not comparable given Gavis write-off in 4QFY18.

Narnolia Financial Advisors expects revenue from US generics business to increase by 6% YoY to USD 212 million in Q4FY19 on account of gRanexa and Levothyroxine launch though the impact on sales will be lower this quarter as the drug was launched in the latter half of the quarter. In the US branded business, the firm assumes the revenue to increase by 63% QoQ to USD 13 million based on the Solosec ramp up as the company is focussing on increasing the prescriptions, it added.

Narnolia expects India and APAC to grow by 14% and 5% YoY to Rs 1097 crore and Rs 699 crore respectively. Going forward, it believes Japan will turn out to be interesting market as the company has received PMDA approval for Etanercept.

The research firm expects EBITDA margin to decline by 171 bps YoY to 15.9% in Q4FY19 on account of increased remediation cost related to inspection in Somerset facility and Mandideep facility which has been classified as “OAI”.
First Published on May 15, 2019 01:06 pm
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