Shares Drop As Brokerages Express Concerns Around Growth And Margin

Maintains a ‘hold’ rating and cuts the target price to Rs 793 apiece from Rs 809, implying an upside of 8%.

After-tax profits below estimates were impacted by a steep increase in other expenses and lower than expected revenue growth in key geographies—North America and India.

The North America business benefited from seasonal tailwinds and volume growth in albuterol sulphate and gSuprep.

Excluding the four new launches, U.S. base business has declined by around 22% year-on-year.

This was an outcome of ongoing price erosion and product discontinuation during the year.

gSpiriva’s launch has been postponed and is now expected to be in H1 of FY24.

In the near term, gSpiriva, Darunavir, Diazepam gel, and Nascobal nasal spray should get added to Lupin’s US portfolio.

In the medium term, LPC could receive U.S. FDA approvals for Pegfilgrastim, Dulera, and Glucagon, which could significantly pick up US revenues.

India business impacted by sluggish growth in the diabetes portfolio and loss of exclusivity in Ondero and Cidmus.

The company has expanded its field force by 1,000 MRs in India and is confident of growing by double digits.

The company expects to start delivering core Ebidta margins of 18–20% in FY24.

Brokerage expects that margin expansion to guided levels depends on the scale up of gSpiriva in the US.

Revised estimates are needed to factor in growth challenges in the India portfolio and high concentration risk (gSpiriva) in the US.

1) Further delay in receiving approval for gSpiriva.

2) Compliance issues at manufacturing facilities impacting future approvals.