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Key Takeaways
Guidance
Lupin (LPC) management did not give any official guidance but indicated that LPC may
grow slower in FY12 than it did in FY11 (when it posted 20% top-line and 27% EPS
growth) but FY13 would be a good year. The guidance is for better growth and improved
EBITDA margins in 2HFY12, led by recovery of growth in the US generics business
(driven by new launches) and sustained double-digit growth for the Japan and India
formulations businesses.
LPC to continue to outperform average industry growth in the domestic
formulations business
Management has guided that LPC will outperform the average industry growth in the
coming years led mainly by its entry into new therapies, expansion of the field force,
aggressive new launches and gradually increasing penetration in tier-II towns. LPC
indicated that the current slowdown in the average industry growth was temporary in
nature.
Niche/patent challenge product launches in the US to continue
We believe the trend of launching niche/patent challenge products in the US will continue
and helped by commercialization of oral contraceptive and ophthalmology products from
FY13. Overall, LPC has a strong pipeline of 101 ANDAs pending approval, of which 15
are FTFs and four likely to be granted sole 180-day exclusivity. The remaining are
eligible for shared 180-day exclusivity.
LPC better positioned to exploit Japanese market
LPC expects to launch 6-7 new products in Japan in FY12. We forecast 17% CAGR for
LPC's Japanese business over FY11-13. The management indicated that it may look at
inorganic opportunities in Japan, to expand its therapeutic presence and establish its
presence in the hospitals segment.
Valuation and view
Key growth drivers for the future include an expanding US generics pipeline, niche/
Para-IV opportunities in the US, strong performance in India and emerging markets and
sustained traction in Japan. The stock trades at 19.7x FY12E and 17.1x FY13E EPS, with
sustained RoE of 25-27%. Our estimates do not include potential Para-IV and OC upsides
but take into account the likely generic competition for Suprax (thus impacting FY13E
EPS). Maintain Buy with a target price of INR514 (20x FY13E EPS).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Guidance
Lupin (LPC) management did not give any official guidance but indicated that LPC may
grow slower in FY12 than it did in FY11 (when it posted 20% top-line and 27% EPS
growth) but FY13 would be a good year. The guidance is for better growth and improved
EBITDA margins in 2HFY12, led by recovery of growth in the US generics business
(driven by new launches) and sustained double-digit growth for the Japan and India
formulations businesses.
LPC to continue to outperform average industry growth in the domestic
formulations business
Management has guided that LPC will outperform the average industry growth in the
coming years led mainly by its entry into new therapies, expansion of the field force,
aggressive new launches and gradually increasing penetration in tier-II towns. LPC
indicated that the current slowdown in the average industry growth was temporary in
nature.
Niche/patent challenge product launches in the US to continue
We believe the trend of launching niche/patent challenge products in the US will continue
and helped by commercialization of oral contraceptive and ophthalmology products from
FY13. Overall, LPC has a strong pipeline of 101 ANDAs pending approval, of which 15
are FTFs and four likely to be granted sole 180-day exclusivity. The remaining are
eligible for shared 180-day exclusivity.
LPC better positioned to exploit Japanese market
LPC expects to launch 6-7 new products in Japan in FY12. We forecast 17% CAGR for
LPC's Japanese business over FY11-13. The management indicated that it may look at
inorganic opportunities in Japan, to expand its therapeutic presence and establish its
presence in the hospitals segment.
Valuation and view
Key growth drivers for the future include an expanding US generics pipeline, niche/
Para-IV opportunities in the US, strong performance in India and emerging markets and
sustained traction in Japan. The stock trades at 19.7x FY12E and 17.1x FY13E EPS, with
sustained RoE of 25-27%. Our estimates do not include potential Para-IV and OC upsides
but take into account the likely generic competition for Suprax (thus impacting FY13E
EPS). Maintain Buy with a target price of INR514 (20x FY13E EPS).
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