Lupin - Target Price of Rs. 803 - Dolat Capital

Lupin continues on the top of our preferred plays on India pharma. We anticipate limited competition generic launches in US (gTricor.gYasmin & OC's) to aid growth trajectory. We expect the US segment to contribute USD 681mn to consolidated revenues during the current fiscal.

- Our FY14 estimates factor in contribution from OC launches (31 filings so far) and Tricor generic (limited competition) at USD 85mn & USD 65mn respectively to US sales. Overall, we anticipate 18% earnings growth over FY13-15E 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 (14% of sales in FY15E; 12% CAGR over FY13-15E) and improvement in profitability aided by India API sourcing.

- The chronic-led domestic formulations portfolio is expected to grow at 17% over FY13-15E. The marketing agreement with Eli-Lilly for anti-diabetic products complements its existing product offerings and is expected to aid growth momentum.

- With minimal product portfolio exposure to NLEM, w e do not expect the pricing policy if implemented, in its current form to dent earnings materially in FY15E.

- At CMP of 750, the stock trades at 18.8x FY14E and 16.5x FY15E earnings. Recommend Accumulate, with target price of 803 (22x FY15E EPS).

Source : Equity Bulls

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