Thursday, 25 May 2017

Lupin slips over 7%, hits fresh 52-week low; CLSA downgrades cuts target price

The pharma major reported 49.2 percent YoY decline in the net profit to Rs 380.2 crore in the fourth quarter ended March on account of drop in US sales and a one-time provisioning

Lupin slipped as much as 7.6 percent to hit its fresh 52-week low of Rs 1,133.50 on Thursday, after the pharma major reported 49.2 percent YoY decline in the net profit to Rs 380.2 crore in the fourth quarter ended March on account of drop in US sales and a one-time provisioning on account of patent litigation over generic oral contraceptive drug in Australia.

The company posted Rs.747.9 crore of in the same period the previous year. Revenues rose by 1.3 percent to Rs 4,253.3 crore.

At 09:25 AM; Lupin recouped some of the losses but was still trading 5.4 percent lower at Rs 1,162. It hit a 52-week low of Rs 1,133.50 and a high of Rs 1,180 in trade today.

The results were below analyst expectations. An analyst poll of CNBC-TV18 estimated the net profit at Rs 653 crore and revenues at Rs 4,454 crore. The EBITDA margin of the company stood at 19.9 percent versus the analyst estimate of 24-27 percent.

Reacting to the earnings, Asia-focussed broker, CLSA downgraded Lupin to outperform from a buy earlier and has also lowered its target price to Rs 1,350 from Rs 1,760 earlier.

“Lupin‘s Q4 sales of Rs 42 billion remained flat on a YoY basis and Ebitda adjusted for a provision were in-line with estimates. Lupin expects a challenging FY18 due to competitive/regulatory pressures in the US and Japan,” said the CLSA note.

US concerns are on account of continued customer consolidation, incremental competition in top products, and slower-than-expected Gavis ramp-up, it said.

The global investment bank further added that a few critical FY19 launches have been pushed out to FY20. Japan market could see pricing-related regulatory pressure. CLSA slashed FY18/19CL earnings per share (EPS) by 18 percent each.

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