Accumulate Lupin - Dolat Capital

Lupin continues on the top of our preferred plays on India pharma. We anticipate limited competition generic launches in US (gYaz, gYasmin and gTricor) to lead the growth trajectory. We expect the US segment to contribute USD 740mn to consolidated revenues.

- Our FY 14 estimates factor in contribution from OC launches and Tricor generic (limited competition) at USD 85mn & USD 35mn respectively to US sales. Overall, we anticipate 26% earnings growth over FY12-14E and return ratios of over 25%.

- The recently acquired I'rom Pharma (Japan) adds specialty injectable product line to its existing portfolio of oral formulations and allows further penetration in DPC hospitals. We expect increased contribution from Japan (15% of sales in FY14E; 30% CAGR over FY12-14E) and improvement in profitability aided by India API sourcing.

- The chronic-led domestic formulations portfolio is expected to grow at 17% over FY12-14E. The marketing agreement with Eli-Lilly for antidiabetic products complements its existing product offerings and is expected to aid growth momentum. We do not expect the pricing policy if implemented, in its current form to dent earnings materially in FY14E. At CMP of 591, the stock trades at 23x FY13E and 19x FY14E earnings. Recommend Accumulate, with target price of 620 (20x FY14E EPS).

Source : Equity Bulls

Keywords