Centrum bullish on Lupin has recommended buy rating on the stock with a target price of Rs 920 in its research report dated August 10, 2018.
Centrum's research report on Lupin
We maintain Buy rating on Lupin with TP to Rs920 (earlier Rs930) based on 23x March’20 EPS of Rs40.0. Lupin’s Q1FY19 results were lower than our and consensus estimates due to pricing pressure in the US generic market. Lupin’s revenue was flat YoY, margin declined 620bps to 13.7%, and net profit declined by 43% YoY. The pricing pressure in the US has eased out due to discontinuation of several generic products by Teva and Sandoz. We believe the company’s robust growth across key markets coupled with its strong pipeline of 162 pending ANDAs with US FDA will drive future growth. The key positive risk to our assumptions would be strong growth in the US market and the key negative risk would be slower growth in the domestic market.
We have reduced our FY19E and FY20E by 7% and 1% respectively. We maintain our Buy rating on Lupin with TP to Rs920 based on 23x FY20E EPS of Rs40.0 with an upside of 11.8% from CMP. We expect the company to benefit from its strong pipeline in the US, its recent launch of Solosec in the US market.
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