Lupin Q2 Results Review - India, EU, Growth Markets Drive Earnings: Motilal Oswal

Motilal Oswal Report

We raise our earnings estimates of Lupin Ltd. by 15%/8%/7% for FY25/FY26/FY27, factoring in:

1. improved visibility for the tender business,

2. enhanced prospects in the Europe/growth markets,

3. increased scope of business from complex products in the U.S. generics, and

4. lower ETR.

We value Lupin at 28 times 12 months forward earnings to arrive at our target price of Rs 2,210.

Lupin has demonstrated a remarkable turnaround in its overall financial performance, transitioning from a two-year decline in earnings during FY21-23 to robust growth in earnings over FY23-25E. This turnaround has been driven by the addition of niche products in the US generics segment, industry outperformance in the domestic formulation segment, and differentiated product launches in the EU/growth markets.

Going forward, we expect 11% earnings CAGR over FY25-27. However, considering its earnings prospects and valuations (at 28x/25x FY26/FY27 P/E), we believe there is limited upside from the current levels. Reiterate Neutral.

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