Lupin falls 6%, analysts revise target post weak Q4 results

Shares of Lupin fell 6 percent on Thursday, extending its loss for second day. Most analysts are concerned after its dismal March quarter results and have reduced target price.

Lupin's consolidated net profit fell 1.1 percent to Rs 547 crore in January-March quarter from Rs 553 crore in the corresponding quarter last fiscal. During the period, its revenue was almost flat at Rs 3,054 crore from Rs 3,051.6 crore year-on-year.

Margins were impacted by overall slower growth. Research & development (R&D) expenses shot 26.1 percent Y-o-Y to Rs 309.6 crore. The company had to also incur a forex loss of Rs 36.7 crore in Q4.

Credit Suisse maintains neutral rating on the stock and expects consensus to cut FY16-17 earnings per share (EPS) by 10-8 percent. "Lupin has shifted gears on complex generics and unlike past practices of adding one vertical a year, Lupin has commenced R&D on several verticals but the benefits are back-ended," it says in a report.

JP Morgan remains neutral on the stock with a target price of Rs 1550 per share but states it will be buyers of the stock. "We revise our FY16-17 estimates down for the earnings miss, delay in approvals and higher R&D spend. In our view, the near-term outlook is muted, but we believe that LPC continues to have the medium-term drivers in place for organic and inorganic growth," it adds.

Macquaire has slashed FY16 EPS by 5 percent factoring a muted first half driven by slower US growth. It has new target price is Rs 2000 per share. However, the brokerage maintains outperform rating but acknowledges that the stock may remain range bound near-term till meaningful US approvals.

"While launch of generic Suprax by Aurobindo and push back of Nexium approval in US will put pressure near-term, we believe medium-term growth potential remains strong with 100 products pending approval with the USFDA," it says.

Citi believes current sluggishness in growth is more of a bottleneck and high base issue than a structural one. The resultant weakness provides yet another opportunity to buy into one of the better business models in the sector, it adds.

At 11:14 hrs Lupin was at Rs 1,619.90, down Rs 70.70, or 4.18 percent on the BSE.