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UBS Investment Research
Lupin Limited
Q3FY11: Ebidta slightly weak due to FX hit
Sales Rs 14.7bn (+17% YoY, +4% QoQ)
Q3FY11 revenues were slightly above UBS-e of Rs 14.4bn. The revenue from
finished dosage business was Rs 12.4bn (+20% YoY) and revenue from API
business was Rs 2.3bn (+19% YoY). Formulation revenue from U.S. and EU
markets combined was Rs 5.7bn (+15% YoY, +10% QoQ) and from Japan was Rs
1.7bn (+16% YoY). Indian formulation business grew by 16% YoY to Rs 4bn.
Pharma dynamics business in South Africa had sales of Rs 498mn (+42% YoY).
EBITDA Rs 2.5bn (+3% YoY), PAT Rs 2.2bn (+39% YoY)
Core EBITDA margin came in at 17.3% below our estimate of 20%. According to
the co. EBITDA was impacted by FX translation loss of Rs 170mn. We hope to get
more details on the concall tomorrow. The material cost declined as a % of sales to
39% from 41% last year. R&D expense increased 26% YoY. PAT at Rs 2.2 bn
(+39%YoY) benefited from higher other operating income and lower tax rate.
Conference call tomorrow
Management will be conducting a conference call on 28th Jan 2011, at 12.30 PM
India time to discuss the results. Dial in numbers +91 22 66295829; +91 22
30650890.
Valuation: Maintain Buy, Price target of Rs 540
We derive our price target using DCF-based methodology, explicitly forecasting
long-term valuation drivers with UBS’s VCAM tool and a WACC of 11%.
Lupin Limited
Incorporated in 1968, Lupin is an India-based pharmaceutical company focused
on the manufacture and global marketing of finished dosages and active
pharmaceutical ingredients (APIs). Lupin is the eighth largest company in the
domestic market and is the largest Indian company in the US based on TRx.
Lupin is also increasing its presence in Japan and Europe. FY10 revenue was
Rs47.4bn, with 19% derived from global API sales, 28% from Indian finished
dosages, 35% from US finished dosages and 18% from RoW and Japan finished
dosages.
Statement of Risk
Key risk for Speciality business is erosion of the business due to generic
substitution. We believe risks include regulatory risks, FDA approval, timing of
approvals, litigation (including the appeal process), accounting/disclosure, and
product pricing risk from generics competition. Pricing pressure in the US
market remains high.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Lupin Limited
Q3FY11: Ebidta slightly weak due to FX hit
Sales Rs 14.7bn (+17% YoY, +4% QoQ)
Q3FY11 revenues were slightly above UBS-e of Rs 14.4bn. The revenue from
finished dosage business was Rs 12.4bn (+20% YoY) and revenue from API
business was Rs 2.3bn (+19% YoY). Formulation revenue from U.S. and EU
markets combined was Rs 5.7bn (+15% YoY, +10% QoQ) and from Japan was Rs
1.7bn (+16% YoY). Indian formulation business grew by 16% YoY to Rs 4bn.
Pharma dynamics business in South Africa had sales of Rs 498mn (+42% YoY).
EBITDA Rs 2.5bn (+3% YoY), PAT Rs 2.2bn (+39% YoY)
Core EBITDA margin came in at 17.3% below our estimate of 20%. According to
the co. EBITDA was impacted by FX translation loss of Rs 170mn. We hope to get
more details on the concall tomorrow. The material cost declined as a % of sales to
39% from 41% last year. R&D expense increased 26% YoY. PAT at Rs 2.2 bn
(+39%YoY) benefited from higher other operating income and lower tax rate.
Conference call tomorrow
Management will be conducting a conference call on 28th Jan 2011, at 12.30 PM
India time to discuss the results. Dial in numbers +91 22 66295829; +91 22
30650890.
Valuation: Maintain Buy, Price target of Rs 540
We derive our price target using DCF-based methodology, explicitly forecasting
long-term valuation drivers with UBS’s VCAM tool and a WACC of 11%.
Lupin Limited
Incorporated in 1968, Lupin is an India-based pharmaceutical company focused
on the manufacture and global marketing of finished dosages and active
pharmaceutical ingredients (APIs). Lupin is the eighth largest company in the
domestic market and is the largest Indian company in the US based on TRx.
Lupin is also increasing its presence in Japan and Europe. FY10 revenue was
Rs47.4bn, with 19% derived from global API sales, 28% from Indian finished
dosages, 35% from US finished dosages and 18% from RoW and Japan finished
dosages.
Statement of Risk
Key risk for Speciality business is erosion of the business due to generic
substitution. We believe risks include regulatory risks, FDA approval, timing of
approvals, litigation (including the appeal process), accounting/disclosure, and
product pricing risk from generics competition. Pricing pressure in the US
market remains high.
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