Lupin - Q1FY21 First Cut - ICICI Securities

(CMP: Rs. 936; MCap: Rs. 42425 crore)

Lupin's Q1FY21 results were a mixed bag. Revenues were below I-direct estimates mainly due to weaker than expected US performance, whereas operational performance was in-line with our expectations. Net profit was lower than our estimates due to lower other income and a higher tax outgo.

Q1FY21 Earnings Summary

- Revenues declined 20.2% YoY to Rs. 3528 crore (I-direct estimate: Rs. 3707 crore) mainly due to Kyowa divestment and due to 21.1% YoY decline in US revenues to Rs. 1216 crore (I-direct estimate: Rs. 1401 crore). Domestic formulations sales also remained subdued de-growing 1.7% YoY to Rs. 1285 crore (I-direct estimate: Rs. 1308 crore). ROW markets declined 9.2% YoY to Rs. 308 crore ( I-direct estimate: Rs. 340 crore). However, API segment grew a robust 17.2% YoY to Rs. 409 crore ( I-direct estimate: Rs. 332 crore)

- EBITDA margins contracted 566 bps YoY to 13.8% (I-direct estimate: 13.5%) due to lower gross margins and higher employee cost. EBITDA de-grew 43.3% YoY to Rs. 488 crore (I-direct estimate: Rs. 500 crore)

- Net profit was at Rs. 107 crore, down 64.7% YoY (I-direct estimate: Rs. 182 crore) in-line with lower operational performance and higher tax rate

Resolution of warning letters and clearance of Official Action Indicated (OAIs) status on plants could be the near term overhang along with progress on the margins front. Barring Covid-19 impact, growth in India remains consistent but remains lumpy for APAC. Like other Pharma majors, Lupin has also chalked out a product and cost rationalisation drive. The result of this drive could be visible two to three years down the line.

We would be revisiting our estimates and coming out with a detailed update post discussion with the management.

Shares of LUPIN LTD. was last trading in BSE at Rs.879.4 as compared to the previous close of Rs. 936.25. The total number of shares traded during the day was 310984 in over 12565 trades.

The stock hit an intraday high of Rs. 915.8 and intraday low of 874.9. The net turnover during the day was Rs. 275253382.

Source : Equity Bulls

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