ICICI Direct is bullish on Lupin has recommended buy rating on the stock with a target price of Rs 1030 in its research report dated August 09, 2020.
ICICI Direct's research report on Lupin
Q1FY21 revenues fell 20.2% YoY to Rs 3528 crore (I-direct estimate: Rs 3707 crore) mainly due to Kyowa divestment and due to 21.1% YoY decline in US revenues to Rs 1216 crore. Domestic formulations sales also stayed subdued de-growing 1.7% YoY to Rs 1285 crore. However, API segment grew a robust 17.2% YoY to Rs 409 crore. EBITDA margins contracted 566 bps YoY to 13.8% (I-direct estimate: 13.5%) due to lower gross margins and higher employee cost. EBITDA de-grew 43.3% YoY to Rs 488 crore (I-direct estimate: Rs 500 crore). Net profit was at Rs 107 crore, down 64.7% YoY (I-direct estimate: Rs 182 crore) in line with lower operational performance and higher tax rate.
We believe the performance can only improve from here on with some high profile launches and cost control measures. We upgrade the stock to BUY and arrive at our target price of Rs 1030 based on 26x FY22E EPS of Rs 39.7.
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