Nomura upgrades Lupin to buy, raises target to Rs 2149/sh

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26 Aug, 2025 12:21

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Brokerage Nomura has upgraded Lupin to buy from neutral rating as it expects approvals of high impact products to drive earnings from Q4FY16 onwards.

The brokerage has also raised target price to Rs 2,149, an potential upside of 14.3 percent. Significant value-accretive acquisitions and visibility to sustain growth by moving up the complexity levels (inhalers and biosimilars) could justify a higher valuation multiple, it feels.Nomura has cut its earnings estimates by 7 percent for FY16, but raised by 21 percent for FY17.

The India's third largest drug maker (by sales) in July acquired US-based GAVIS Pharmaceuticals and Novel Laboratories (GAVIS) for USD 880 million, which enhances broadens Lupin’s pipeline in dermatology. Last week, media report indicated that Lupin is eyeing big acquisition in the UK.

The brokerage says while the number of approvals has increased for Lupin in FY16 (14 so far against 10 in FY15), the average time for an approval has also risen to more than 60 months. Most of the recent approvals were for pre-FY13 filings.

According to its note, more than the number of approvals, it is the approval of select high impact products -- gGlumetza, gNexium, gWelchol and gRenvela/Renagel -- that matter most for growth.

"Lupin should benefit from a price hike in Glumetza as it is in a unique position to address the low-competition 1,000 mg metformin ER market through both gFortamet and gGlumetza. Industry checks suggest that the gWelchol opportunity has been pushed out to FY17. gNexium and gRenvela/Renagel remain FY16 opportunities, but the uncertainty over approval timeline remains given the regulatory hurdles," it explains.Approval for key generics gNexium, gWelchol and gRenvela/Renagel are catalysts, it feels.

At 15:20 hours IST, Lupin was quoting at Rs 1,868.50, down Rs 12.75, or 0.68 percent on the Bombay Stock Exchange.Posted by Sunil Shankar Matkar