Buy Lupin; target of Rs 979; KRChoksey

KRChoksey is bullish on Lupin has recommended buy rating on the stock with a target price of Rs 979 in its research report dated August 11, 2020.

Broker Research

August 12, 2020 / 16:07 IST

KRChoksey's research report on Lupin

Lupin reported Revenue decline of 9.0% YoY (down 8.3% QoQ) to INR 35,279 mn. EBITDA margin contracted by 542 bps YoY to 13.8% in 1QFY21 (from 19.3% last year). On a sequential basis EBITDA margin improved nominally by 18 bps QoQ. Company’s Net Profit declined 64.7% YoY (down 72.6% QoQ) to INR 1,069 mn for the quarter compared to Net Profit of INR 3,031 mn in 1QFY20. Net Profit margin came in at 3.0% (-479bps/-710bps YoY/QoQ) vs 7.8% in 1QFY20.

Outlook

In the wake of expected launch of Albuterol Sulfate in Sep-20, ramp-up in Levothyroxine & Metformin sales coming back, we are raising our earlier P/E multiple of 22.0x to 24.0x on FY22E EPS of INR 40.8/share and arrive at a revised target price of INR 979/share (earlier INR 893/share); indicating an upside of 2.2%. Accordingly, we reiterate our rating at “HOLD” on the shares of Lupin.

For all recommendations report, click here