April 21, 2025
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Research Report on Lupin Ltd by Deven Choksey Securities
Analysis dated April 2025
Sector: Pharma company
Price on Analysis date: Rs. 2000
Target Rs. 2472
(23.60% Upside potential)
Target Period: 3 Months
Research Report
Lupin has a strong presence in over 100 countries, with key markets including the United States,
India, and EMEA. Lupin’s product portfolio spans key therapeutic areas such as cardiovascular,
diabetology, respiratory, dermatology, central nervous system (CNS), and anti-infectives. Lupin
operates 15 manufacturing sites and 7 R&D centers globally.
Key geographies deliver strong growth driven by complex generics and chronic therapies
For Q3FY25, the revenue increased 11.0% YoY, supported by strong growth across key geographies such as North America, India, and EMEA. Revenue from North America (37.8% of revenue) grew 12.3% YoY, driven by growth in new product launches, expansion in complex generics and respiratory portfolio. Revenue from India (34.4% of revenue) grew 11.9% YoY, led by growth across key therapy mix, an increase in product launches, and an increase in chronic therapy contribution. Revenue from EMEA (11.1% of revenue, Europe and South Africa) grew 20.9% YoY, driven by strong double-digit expansion in Germany and the UK, and increased sales from key respiratory products.
Improved mix and efficiencies support margin uplift; FY25E guidance intact
Gross margin expanded 336 bps YoY to 70.2%, supported by a better product mix including complex generics and speciality products, and a favourable cost environment. EBITDA increased 33.7% YoY, EBITDA margin expanded 402 bps YoY to 23.7%, primarily due to increase in gross margins, and operating leverage. The company believes they should be able to deliver EBITDA margins between 23.0% and 23.5% in FY25E.
R&D focus and recent acquisitions strengthen pipeline and diabetes portfolio
Lupin’s complex generics portfolio accounts for ~35.0% of North American sales. The company plans to file 30+ ANDAs in the next two years, with over 50.0% being complex products. Products like Albuterol (23.0% market share), Tiotropium (29.6% share), and Arformoterol (30.3% share) continue to drive sales. Low single-digit price declines in base products partially offset the volume growth from existing products and contributions from new product launches in the U.S. market. The company anticipates its US business to deliver double-digit growth in FY25E, ahead of its earlier guidance of high single-digit growth in the segment.
The company acquired the Huminsulin range of products from Eli Lilly and three trademarks from Boehringer Ingelheim for the Indian market, strengthening its diabetes portfolio. A significant portion of the R&D spend is attributed to the company’s complex generics portfolio, specifically five nasal sprays expected to be filed in Q4FY25E.
We expect the revenue to grow at 13.1% CAGR and PAT to grow at 35.9% CAGR over FY24-FY27E.
Currently, the stock is trading at a PE multiple of 24.5x/18.7x based on FY26E/FY27E EPS,
respectively. We assign a PE multiple of 23.6x to arrive at a target price of INR 2,472, which will have
an upside potential of 26.5%. We have a BUY rating on the stock since 13th February 2025.
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