Lupin Pharma Ltd
In line with expectations; maintain buy
BUY
CMP: Rs 1239 Target Price: Rs 1550
Lupin's Q2FY10 APAT was in line and 15% ahead of market expectations with a) 23% YoY growth in revenue (est. of 24% growth), b) 20% YoY growth in operating profit (margins contracted by 40 bps) and c) 15% YoY growth in APAT. On the operating front company achieved a operating margins of 19.3% mainly because of higher other operating income. Adjusting to other operating income, operating margins contracted by 210 bps to 14.7% because of a) 580bps expansion in raw material cost, b) 1.2% ppt increase in R&D cost and c) higher SG&A cost because of increased manpower and promotional expenditures. We believe some of the expenditures are lumpy in nature and company should attain a long term sustainable margins of 20-21% on the back of a) higher revenue from formulation business, b) expansion in the margins in Kyowa operations and c) higher contribution of branded business in the US. Moreover, apart from building sustainable franchises in key geographies such as US, Japan and India, Lupin is also looking to enter Lat Am and Middle East markets (through organic and in-organic initiatives) which offers high growth potential. We maintain our earning estimates of Rs73.9 and Rs95.1 for FY10E/FY11E respectively and reiterate buy rating with a target price of Rs1550. At CMP of Rs1239, the stock is trading at 16.8x FY10E and 13.0x FY11E (around 30% discount to comparable peers). We expect company to continue to outperform its comparable peers and expect it to command similar valuation if not premium to its comparable peers. Lupin is our preferred bet in the large cap Pharma space.
--~--~---------~--~----~------------~-------~--~----~
Safe Harbor:
The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
You received this message because you are subscribed to the Google Groups "Investors Please Listen !" group.
To post to this group, send email to investorspleaselisten@googlegroups.com
To unsubscribe from this group, send email to
investorspleaselisten+unsubscribe@googlegroups.com For more options, visit this group at http://groups.google.com/group/investorspleaselisten?hl=en
-~----------~----~----~----~------~----~------~--~---
No comments:
Post a Comment