4QFY13 performance was above estimates. Key highlights:
Lupin's revenue grew 35% YoY to INR25.37b. Ex one-offs, core revenue grew
38% to INR23.57b (est of INR22.73b). Core EBITDA was up more than 2x to
INR5.1b (est of INR4.43b) on a low base of 4QFY12. Ex one-offs, adj PAT was
at INR3.36b (est of INR2.6b). PAT growth is higher than EBITDA growth due to
lower tax rate of 20.7% v/s estimate of 33% and 45% in 4QFY12.
Reported EBITDA grew by 83% to INR6.1b (v/s est of INR5.42b) and reported
EBITDA margin expanded by 6.4% YoY to 24% on a low base. Margin expansion
was mainly on account of (1) contribution from one-off sales, (2) better
product mix in the US and (3) lower other expenses and employee costs
(operating leverage benefit). Notably, PAT growth, aided by strong
operational performance, has been achieved despite higher depreciation
costs, which include product write-off for carrying the value of Antara brand.
Key takeaways from analyst meet: LPC aspires to touch USD5b (FY13 -
USD1.8b) in sales over the next five years to be achieved through (1) entering
niche segments of derma, controlled substances, inhalation; (2) biosimilars
opportunity and (3) inorganic opportunities in LatAm, Japan or RoW markets.
Lupin has a pipeline of 116 products (market size of USD54b) to support US
growth, while India formulations will continue to outperform the industry.
Maintained target of 75-100bp YoY improvement in EBITDA margin.
Valuation and view: Key growth drivers in FY14E/15E will be: (1) increased traction
in India formulations and emerging markets, (2) strong launch pipeline for the
US and (3) contribution from oral contraceptives in the US. Post 4QFY13 results,
we raise FY14E/15E estimates by 13%/14%, primarily to reflect the strong
operational performance in core business. We expect EPS of INR34.8 for FY14E
(up 38.8%), INR42.5 for FY15E (up 22%) - 30% EPS CAGR for FY13-15E. The stock
trades at 20.8x FY14E and 17x FY15E EPS. Buy with a TP of INR851 (20x FY15E EPS).
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Lupin's revenue grew 35% YoY to INR25.37b. Ex one-offs, core revenue grew
38% to INR23.57b (est of INR22.73b). Core EBITDA was up more than 2x to
INR5.1b (est of INR4.43b) on a low base of 4QFY12. Ex one-offs, adj PAT was
at INR3.36b (est of INR2.6b). PAT growth is higher than EBITDA growth due to
lower tax rate of 20.7% v/s estimate of 33% and 45% in 4QFY12.
Reported EBITDA grew by 83% to INR6.1b (v/s est of INR5.42b) and reported
EBITDA margin expanded by 6.4% YoY to 24% on a low base. Margin expansion
was mainly on account of (1) contribution from one-off sales, (2) better
product mix in the US and (3) lower other expenses and employee costs
(operating leverage benefit). Notably, PAT growth, aided by strong
operational performance, has been achieved despite higher depreciation
costs, which include product write-off for carrying the value of Antara brand.
Key takeaways from analyst meet: LPC aspires to touch USD5b (FY13 -
USD1.8b) in sales over the next five years to be achieved through (1) entering
niche segments of derma, controlled substances, inhalation; (2) biosimilars
opportunity and (3) inorganic opportunities in LatAm, Japan or RoW markets.
Lupin has a pipeline of 116 products (market size of USD54b) to support US
growth, while India formulations will continue to outperform the industry.
Maintained target of 75-100bp YoY improvement in EBITDA margin.
Valuation and view: Key growth drivers in FY14E/15E will be: (1) increased traction
in India formulations and emerging markets, (2) strong launch pipeline for the
US and (3) contribution from oral contraceptives in the US. Post 4QFY13 results,
we raise FY14E/15E estimates by 13%/14%, primarily to reflect the strong
operational performance in core business. We expect EPS of INR34.8 for FY14E
(up 38.8%), INR42.5 for FY15E (up 22%) - 30% EPS CAGR for FY13-15E. The stock
trades at 20.8x FY14E and 17x FY15E EPS. Buy with a TP of INR851 (20x FY15E EPS).
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