Lupin reported results much ahead of expectations, Target price & Estimates under review due to better results as well as concerns on warning letter from USFDA
Lupin reported excellent set of numbers for FY09. The spectacular growth of 40% in topline came from high growth in US markets & Japan subsidiary. The EBITDA increased by 60% while the reported profit jumped up by 64%.
Though the company has performed much better than our expectations we are awaiting the impact of warning letter issued by USFDA for its Mandideep facility. The company has informed that US department had found irregularities on 18 counts out of which company has already satisfied almost half the issues but the remaining issues will need some more time. The company also informed that only 1 application is pending for approval from this facility. We believe that this warning letter may not have much financial impact but it is definitely is a sentiment dampener for the stock price.
Our Take: We had a buy rating on the stock with a target price of Rs 789 which has already been met. We are in the process of analyzing the impact of better results & the US warning letter, hence our target price & estimates for FY10 onwards are under review.
EXIT POLLS & news flow on govt formation
As we are approaching the election result day on Saturday, a plethora of news flow has started. Almost all the channels are working overnight to come out all sorts of estimates (guestimates) to give you an idea of who is going to make the next govt. We believe all this is noise for investors. While this kind of events may be trading opportunities, for investors these are nothing more than noise. If we go by previous history most of these exit polls or pre results estimates have been way different from the actual results.
Our advice: Investors should stay away from the news channels. Better is not to listen to all these guess about results because chances are that no body will be correct. Be ready with your list of good quality stocks. If in this chaos your stock is available at 20-30% lower prices, pick it up. If you are holding something in your portfolio & that moves up 20-30% in this mayhem book profits & wait for the opportunity to reinvest in that a later date.
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