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OW: Higher costs and tax clip upside
Sales beat our estimates by c7% largely because of favourable
rupee depreciation. India up 30%, US 24% and Japan 43% yoy
US outlook strong on c25 launches in FY13 – Geodon,
Combivir, Tricor and oral contraceptives – Yaz, Yasmin
Costs remain high, tax to increase. Maintain OW,
TP unchanged at INR560
Lupin’s reported 3QFY12 net profit of INR2.35bn was up c5% yoy, in line with
HSBCe (c3% lower than consensus) and affected by a higher tax rate in the quarter. Net
sales at INR18.2bn were 6.4% higher than our estimate, essentially because of favourable
currency. 3QFY12 also included the integration of recently acquired I’rom pharma in
Japan for one month. This, along with the increase in salesforce, R&D and depreciation,
limited overall net profit growth. Sales include a forex loss of INR260m.
India growth solid, US outlook strong: India formulation sales grew 30% for the
quarter, assisted by recovery in the anti-infectives segment and improved traction from
Lilly and new launches. US grew 12% yoy on constant currency, in line with our estimate.
Suprax grew 21%, whereas Antara was up 8% yoy on constant currency. Within generics,
the company expects to launch c25 products this year including generic Geodon,
Combivir and oral contraceptives. Additionally, Lupin is entitled to launch generic TriCor
in the next fiscal year, as per settlement. Though the exact timeline is not known, we
expect it to be around mid-2012. The company has filed three ANDAs this quarter.
Maintain OW and TP of INR560: We make changes to our currency assumptions from
INR45 to INR48 for FY13 and reduce sales from Fortamet, oral contraceptives, while at the
same time increase India and Japan. We incorporate I’rom numbers, which add cUSD70mn
to sales in Japan, though at the same time increase costs. We additionally increase our tax
rate assumption to 20% for FY13 as per guidance. The net impact is EPS changes of c2%
and -2% in FY13 and FY14, respectively. We continue to value Lupin at 22x September
2013e EPS of INR25.4 to derive our TP of INR560. The near-term catalyst is the launch of
generic Geodon in March 2012. The key risk is earlier-than-anticipated entry in Suprax and
continued higher costs resulting in subdued margin expansion. Additionally, incremental
generics in June in atorvastatin could affect sales from simvastatin.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
OW: Higher costs and tax clip upside
Sales beat our estimates by c7% largely because of favourable
rupee depreciation. India up 30%, US 24% and Japan 43% yoy
US outlook strong on c25 launches in FY13 – Geodon,
Combivir, Tricor and oral contraceptives – Yaz, Yasmin
Costs remain high, tax to increase. Maintain OW,
TP unchanged at INR560
Lupin’s reported 3QFY12 net profit of INR2.35bn was up c5% yoy, in line with
HSBCe (c3% lower than consensus) and affected by a higher tax rate in the quarter. Net
sales at INR18.2bn were 6.4% higher than our estimate, essentially because of favourable
currency. 3QFY12 also included the integration of recently acquired I’rom pharma in
Japan for one month. This, along with the increase in salesforce, R&D and depreciation,
limited overall net profit growth. Sales include a forex loss of INR260m.
India growth solid, US outlook strong: India formulation sales grew 30% for the
quarter, assisted by recovery in the anti-infectives segment and improved traction from
Lilly and new launches. US grew 12% yoy on constant currency, in line with our estimate.
Suprax grew 21%, whereas Antara was up 8% yoy on constant currency. Within generics,
the company expects to launch c25 products this year including generic Geodon,
Combivir and oral contraceptives. Additionally, Lupin is entitled to launch generic TriCor
in the next fiscal year, as per settlement. Though the exact timeline is not known, we
expect it to be around mid-2012. The company has filed three ANDAs this quarter.
Maintain OW and TP of INR560: We make changes to our currency assumptions from
INR45 to INR48 for FY13 and reduce sales from Fortamet, oral contraceptives, while at the
same time increase India and Japan. We incorporate I’rom numbers, which add cUSD70mn
to sales in Japan, though at the same time increase costs. We additionally increase our tax
rate assumption to 20% for FY13 as per guidance. The net impact is EPS changes of c2%
and -2% in FY13 and FY14, respectively. We continue to value Lupin at 22x September
2013e EPS of INR25.4 to derive our TP of INR560. The near-term catalyst is the launch of
generic Geodon in March 2012. The key risk is earlier-than-anticipated entry in Suprax and
continued higher costs resulting in subdued margin expansion. Additionally, incremental
generics in June in atorvastatin could affect sales from simvastatin.
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