LUPIN - Result Analysis Q1 FY21

LUPIN - Result Analysis  Q1 FY21

CMP: 958.85 (As on 11-08-2020)

Total income from operations 3,527 Cr 

3,877 Cr (-9.01%) YoY | 3,845 Cr (-8.22%) QoQ 

Year ending revenue: 15,347 Cr Vs. 14,665 Cr (4.67%)

Net Profit of 108.7 Cr 

264.3 Cr (-59.01%) YoY 391.2 Cr (-72.33%) QoQ 

Year ending Net profit: (399.8) Cr Vs. 607 Cr (-165.84%)

EPS (in Rs.) 2.35

6.67 YoY | 8.57 QoQ 

Year ending EPS: (5.95) Vs. 13.40

View: Result is declined and below expectation. YoY and QoQ revenue declined and profit also corrected significantly in YoY and QoQ. 

Business Updates & Highlights

Q1FY21 EBITDA is around INR 488.1 Cr Vs. 746.4 Cr in Q1FY20 Vs. 523.7 Cr in Q4FY20 therefore declined by 52.4% in YoY and 2.9% in QoQ. EBITDA margin in Q1FY21 was 14.7% Vs. 20.0% in Q1FY20 Vs. 13.8% in QoQ therefore EBITDA margin significantly declined in 530 bps in YoY and up by 90 bps in QoQ.

Manufacturing and other expenses - INR 9,58.3 Cr, at 27.6% of sales, compared to INR 1,151.9 Cr in Q4 FY2020 Vs. 1086 Cr in Q1FY20. 

Investment in R&D - INR 357.5 Cr, at 10.3% of sales, compared to INR 344.2 Cr in Q4 FY2020.

Personnel cost - INR 793.6 Cr, at 22.9% of sales, compared to INR 763.5 Cr in Q4 FY2020

Company is primarily operating into four main geographical segments which are as under:

North America

Lupin’s North America sales for Q1 FY2021 were INR 1,216 Cr, compared to sales of INR 1,579.1 Cr during Q4 FY2020, down 21% compared to sales of INR 1,541.2 Cr during Q1 FY2020; accounting for 35% of Lupin’s global sales

India

Lupin’s India formulation sales for Q1 FY2021 were INR 1,285.4 Cr, compared to sales of INR 1,192 Cr during Q4 FY2020 and sales of INR 1,307.7 Cr during Q1 FY2020; accounting for 37% of Lupin’s global sales.

Growth Markets (LATAM and APAC) 

Lupin’s LATAM & APAC regions together form our Growth Markets. Together, Growth Markets had sales of INR 269.9 Cr for Q1 FY2021, compared to sales of INR 280 Cr during Q4 FY2020, down 6% compared to sales of INR 286.4 Cr during Q1 FY2020; accounting for 8% of Lupin’s global sales.

Europe, Middle-East and Africa (EMEA)

Lupin’s EMEA sales for Q1 FY2021 were INR 250 Cr, compared to sales of INR 364.9 Cr during Q4 FY2020, down 4% compared to sales of INR 260.4 Cr during Q1 FY2020; accounting for 7% of Lupin’s global sales.

Global API 

Lupin’s Global API sales for Q1 FY2021 were INR 409 Cr, compared to sales of INR 328.6 Cr during Q4 FY2020 and up 17% compared to sales of INR 348.9 Cr during Q1 FY2020; accounting for 12% of Lupin’s global sales.

The Company filed 4 ANDAs during the quarter and received 4 ANDA approvals from the U.S. FDA. The Company launched 2 products during the quarter in the US market. The Company now has 175 products in the US generics market. Cumulative ANDA filings with the US FDA stood at 434 as of June 30, 2020, with the Company having received 276 approvals to date.

Capital Expenditure for the quarter - INR 179.3 Cr as of June, 2020. 

Financial

ROE and ROCE is around (4%) and 9% respectively and book value per share is around INR 277 and share is currently trading at 3.2x of its book value. Company is currently trading at annualized PE) of around 110 which is very high and expensive as per Industry benchmark. Promoter holding in the company is around 47 which is good and stable. FIIs and mutual fund hold around 21.3% and 11.9% respectively. 

Position: Share strong support price is INR 810/750. Long term investor based on their risk appetite may continue with the company.

Share View: Share price high 955 (52 week) and now 879. Lupin is an innovation-led transnational pharmaceutical company headquartered in Mumbai, India. The Company develops and commercializes a wide range of branded and generic formulations, biotechnology products and APIs in over 100 markets in the U.S., India, South Africa and across Asia Pacific (APAC), Latin America (LATAM), Europe and MiddleEast regions.

Opportunities

The Company enjoys leadership position in the cardiovascular, anti-diabetic, and respiratory segments and has significant presence in the anti-infective, gastro-intestinal (GI), central nervous system (CNS) and women’s health areas. Lupin is the third largest pharmaceutical company in the U.S. by prescriptions. The Company invests 10.3% of its revenues on research and development. Lupin is now the market leader in 62 products in the US generics market and amongst the Top 3 in 126 of its marketed products (market share by prescriptions, IQVIA June 2020). API business growth in this quarter was good and increased by 24.5% in QoQ and 17.2% in YoY.

Risk

Significantly declined EBITDA in QoQ and lower sales also in this quarter. Despite mostly pharmaceuticals player outperform in EBITDA and topline in this quarter Lupin topline and profit was down on YoY and QoQ. India Region Formulation sales declined by 6% compared to Q1 FY2020 which is 37% of Lupin’s sales. Lupin North America business declined by 23% and 21% in YoY and QoQ which is accounted 35% of Lupin’s sales. Total Formulations business declined by 11.6% in YoY and QoQ.

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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