Lupin Q3 Results Review - Superior Performance, Controlled Costs Drive Earnings: Motilal Oswal

Motilal Oswal Report

Lupin Ltd.'s delivered a beat on our estimates for Q3 FY24. Superior performance across key markets, supported by controlled costs, fueled better-than-expected profitability for the quarter.

We raise our earnings estimates for FY24/FY25/FY26 by 18%/16%/14%, factoring in:

1. a strong traction in the niche launches,

2. increased launch momentum and improving MR productivity in the domestic formulation market, and

3. better operating leverage.

We value Lupin at 25 times 12 months forward earnings to arrive at our target price of Rs 1,480.

Lupin has exhibited a healthy turnaround in business from a 4.4% Ebitda margin in Q1 FY23 to 19.7% in Q3 FY24. Further, the U.S. generics launch pipeline also looks encouraging over the next two-three years.

Accordingly, we model 14% earnings Compound annual growth rate aided by 19%/10% sales CAGR in the U.S./DF and 90 basis points margin expansion. Hence, we upgrade the stock to 'Neutral' from 'Sell'.

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