Lupin Ltd - 4QFY2016 Result Update - Angel Broking

For 4QFY2016, Lupin posted results above our expectations. Sales came in at Rs. 4,091cr (V/s Rs. 3,665cr expected), up 34.0% yoy. Sales growth was driven by Formulations (Rs. 3,807.5cr) which rose by 38.6% yoy, while API (Rs. 283.8cr) witnessed a dip of 7.7% yoy. On the operating front, the EBDITA margin came in at 31.2% V/s 25.1% in 4QFY2015 and V/s our expectation of 29.5%. The expansion in the OPM was on the back of a firmer GPM which came in at 73.8% V/s 67.9% in 4QFY2015 and V/s 72.7% expected. This along with high other income at Rs. 115cr (V/s Rs. 41cr in 4QFY2015) led the net profit to come in at Rs. 807cr V/s Rs. 547cr in 4QFY2015 and V/s Rs. 829cr expected. We recommend a Buy on the stock with a price target of Rs. 1,809.

Numbers outperform our expectations: Sales for the quarter came in at Rs. 4,091cr (V/s Rs. 3,665cr expected), up 34.0% yoy. Sales growth was driven by Formulations (Rs. 3,807.5cr) which rose by 38.6% yoy, while API (Rs. 283.8cr) witnessed a dip of 7.7% yoy. Formulation sales were driven by USA (Rs. 2,187.1cr, +58.7% yoy), Europe (Rs. 125.4cr, +40.7% yoy), India (Rs. 761.5cr, +14.7% yoy, Japan (Rs. 344.2cr, +17.0% yoy) and ROW (Rs. 275.8cr, +38.3% yoy). On the operating front, the EBDITA margin came in at 31.2% V/s 25.1% in 4QFY2015 and V/s our expectation of 29.5%. This along with high other income at Rs. 115cr (V/s Rs. 41cr in 4QFY2015) led the net profit to come in at Rs. 807cr V/s Rs. 547cr in 4QFY2015 and V/s Rs. 829cr expected.

Outlook and valuation: We expect Lupin to post a net sales CAGR of 16.7% to Rs. 18,644cr and earnings CAGR of 17.2% to Rs. 69.3/share over FY2016-18E. Currently, the stock is trading at 25.9x and 21.7x its FY2017E and FY2018E earnings, respectively. We recommend a Buy on the stock.

Shares of LUPIN LTD. was last trading in BSE at Rs.1475.85 as compared to the previous close of Rs. 1488.9. The total number of shares traded during the day was 86105 in over 4920 trades.

The stock hit an intraday high of Rs. 1495.85 and intraday low of 1466. The net turnover during the day was Rs. 126971675.

Source : Equity Bulls

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