Lupin shares climbed over 8 percent on July 4 after brokerage firm Kotak Institutional Equities double upgraded the stock to an 'add' rating, from the previous 'sell' call. KIE's bullishness over Lupin stems from the drugmaker's strong US portfolio which makes it well-poised
to surprise positively on Street’s estimates in the US in FY25 and FY26.
At close, shares of Lupin ended at Rs 1,764.05 on the NSE, higher by 8.18 percent.
Factoring that in, the brokerage also raised its price target for Lupin by nearly 30 percent to Rs 1,805, reflecting the potential for an upside of around 11 percent from the previous close. This is despite the over 88 percent gains delivered by the stock in the last one year.
Kotak believes that Lupin has a bunch of products lined up, which will ensure a limited earnings dip in FY27 after a strong FY26 despite baking in a sharp decline in Albuterol sales over the next couple of years.
Kotak expects Lupin's robust US sales trajectory to continue amid a stable US generics pricing environment, despite declines in Albuterol and Suprep in FY25. Even though Spiriva and Albuterol, will still remain critical contributors to Lupin's earnings in FY25 and FY26, the brokerage feels it will be Myrbetriq and Tolvaptan, that will make the next fiscal remarkable for the drugmaker. Tolvaptan is expected to be launched in the first quarter of FY26.
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Spiriva and Albuterol are drugs from Lupin's respiratory portfolio while Myrbetriq is used to treat overactive bladder. On the other hand, Tolvaptan is used to treat hyponatremia (low sodium in the blood) in patients with heart failure or syndrome of inappropriate antidiuretic hormone.
The brokerage also believes that the Street is underestimating the potential revenue contribution from Tolvaptan. "With US$1.2 billion US sales reported by Otsuka as of 2023 and Lupin's 180-day sole exclusivity from April 2025, we believe the opportunity from Tolvaptan in FY26, coming around $106 million will be much above Street’s estimates," KIE stated.
Consequently, Kotak anticipates Lupin's US sales to grow a healthy 12 percent year-on-year to $914 million in FY25 and 11 percent to $1,013 million in FY26.
In addition, KIE also sees a possibility of further positive surprises if Lupin continues to gain share in Spiriva as well and if there is lower-than-expected hit from Albuterol competition.
In conclusion, KIE paints a bright picture for Lupin for the coming fiscals which also attracted investors to lap up the stock.
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