LUPIN LTD Stock Research Report

NICHE APPROVALS AND LOW INPUT COSTS, POSITIVE OUTLOOK…

Lupin Limited is a prominent global pharmaceutical leader based in Mumbai, India, distributing its products across over 100 markets. Specializing in a wide array of pharmaceutical solutions—including branded and generic formulations, complex generics, and biotechnology products—Lupin is trusted by healthcare professionals worldwide. With a robust infrastructure of 15 advanced manufacturing sites and 7 research centres, the company is dedicated to enhancing patient health outcomes through its subsidiaries, including Lupin Diagnostics and Lupin Digital Health.

Key Rationale

◼ Strong Q1FY25:

 Lupin reported a strong set of results, exceeding our expectations. Reported revenue grew by12.6% YoY, led by the India business, which grew by 18.8% YoY, and the Asia-Pacific business which grew by 30% YoY. However, the U.S. business grew by only 5.6% YoY, while the APIbusiness declined by 18.1% YoY.Gross margins improved by 293bps YoY and 58bps QoQ, driven by a favourable product mix, lowerinput costs, a reduced share of in-licensed products, and increased cost efficiencies. EBITDAmargins improved by 437bps YoY and 207bps QoQ. Reported PAT grew by 74% YoY, surpassingexpectations.

◼ New Products Launch:

In the US, Driven by key products like gMirabegron, gSpiriva, Albuterol and Pred Forte, along with a promising revenue boost from recently launched Tolvaptan. With a strong foothold in the stable US generics market and no expected competition for Spiriva until FY2027, Lupin presents a compelling opportunity for investors looking to capitalize on the pharmaceutical sector’s growth…

LUPIN LTD Stock Research Report

◼  Outlook & Valuation:

New launches in the US market like Darunavir and Spiriva have gained market shares of up to 30% and 25% respectively. The recent launch approval of gMegabran has the potential to add yearly incremental sales of $50 Mn. Recent approvals for Tolvaptan (market size $287 Mn) and Xyway (market size $958 Mn with 180 days exclusivity, could add business in the second half.
The company has a strong pipeline of products including Cynocobalamin, Diazepam Gel, Vereniciline, Bromfenac, Glucagen, and Risperidone, among others. Double-digit growth in the India business is expected as the company has already increased MR (Medical Representative) numbers to 1,000. An uptick in the API (Active Pharmaceutical Ingredient) business, as the API industry is witnessing a demand revival. Lupin’s margins, currently at 18%, are still below the industry levels of 22%, which implies a significant scope for margin improvement in the upcoming quarters. This improvement will also be supported by the macro environment, which is currently favourable for the industry, such as falling raw material prices, low logistic costs, and fuel costs.

◼ Valuation: At the CMP, the stock trades at 36.4x and 30.9x its FY25E and FY26E earnings

Key Financials (Consolidated)