With continued pricing pressure on its key molecules (gGlumetza, gFortamet and gMethergine) and lack of key launches, its US business is expected to report weak growth
Lupin is likely to report a subdued show for the December quarter results as lack of new launches and pricing pressure could impact its financials.
Here is a gist of what brokerages think about the results.
Brokerage: Edelweiss | Profit: Rs 281.8 crore
The brokerage expects US sales (~USD 180 million) to grow 8% sequentially as launch of gBeyaz and gTemovate, coupled with full quarter of Solosec and Tobi, will likely offset erosion ingNamenda.
Further, it sees domestic business to grow 8% YoY on a base made unfavourable by GST-related restocking, while APAC sales to be assisted by a 6% JPY tailwind. EBITDA margins expected to grow by 130bps QoQ, to ~15%, led by rupee depreciation
Brokerage: Reliance Securities | Profit: Rs 253.4 crore
Reliance Securities expects muted growth in sales during the quarter. With continued pricing pressure on its key molecules (gGlumetza, gFortamet and gMethergine) and lack of key launches, its US business is expected to report weak growth. India business is expected to report healthy growth of 12.3%.
EBITDA margin is expected to contract by 100 bps YoY to 16.3% due to weak US sales and higher raw material cost from China.
Factors to watch out for: Outlook on Gavis business/new launches, outlook on India/US and Japan business, and update on the USFDA warning letter Goa and Pithampur Unit-2.
Brokerage: Motilal Oswal | Profit: Rs 247.6 crore
Motilal Oswal expects Lupin to report growth of 5% YoY in its Q3FY19 revenue at Rs 4,180 crore primarily due to ~9% YoY decline in the US business (~32% of total sales).
EBITDA is expected to decline 6% YoY during the quarter to Rs 630 crore, with EBITDA margin declining ~180bp YoY to 15.5%, primarily due to lower gross margin and higher other operating expenses.
Key issues to watch out for
- Update on traction in Solosec brand for the US market
- Update on warning letter for Goa and Indore facility
- Outlook on inorganic growth initiatives
Brokerage: Emkay | Profit: Rs 241.7 crore
Q3FY19 could be muted quarter for Lupin given the drought of high-value launches within the US geography. A few new launches (like gMepron, gDacogen and gRapaflo) will offset the pricing pressure in the base portfolio.Key things to look for would be commentary on the progress of remediation for Goa and Indore facilities and product pipeline.