Annual Report Analysis - Lupin: Edelweiss PDF link

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Lupin’s FY14 annual report analysis highlights robust operating performance with revenues clocking 17.1% YoY growth, PBT rising 47.1% to INR28.3bn and RoCE surging to 41.0% (FY13: 32.7%). The growth and margin improvement was mainly  supported by better product mix and exchange rate depreciation. Our calculation suggest constant currency EBITDA growth of 15.2% vis-à-vis reported of 32.3%.  Subsidiaries’ performance improved with combined PAT moving up to INR2.8bn in FY14 from INR1.2bn in FY13. However, Lupin invested INR3.0bn in the loss-making entity, Lupin Atlantis Holdings SA (LAHSA) that posted loss of INR1.3bn in FY14.  Net unhedged receivables were at INR6.3bn, at 9.0% of net worth in FY14 as opposed to a payable position of INR4.6bn, at 8.9% mainly due to repayment of foreign currency borrowings. Loans outstanding fell to INR6.5bn with D/E ratio at 0.1x in FY14 (FY13: INR11.6bn, D/E ratio 0.2x).

What’s on track?

Lupin reported stellar operating performance , mainly aided by better product mix and exchange rate depreciation. EBITDA margin and RoCE stood at 26.6% and 41.0% (FY13: 23.5% and 32.7%), respectively.

Subsidiary Lupin Pharmaceuticals Inc., (LPI) paid INR3.0bn dividend to Lupin in FY14 (FY13: INR0.0)

Operating cash flow post interest and adjusted for acceptances recorded robust 65.9% YoY growth to INR20.0bn in FY14, owing to strong profitability and marginal fall in working capital requirement.

Ratio of capitalised R&D to total R&D expenditure has been on a declining trend — from 16.5% in FY10 to 6.6% in FY14. R&D expense stood at INR9.6bn in FY14, @ 8.5% of revenues (FY13: INR7.7bn, 8.1% of revenues).

Loans outstanding fell to INR6.5bn with D/E ratio at 0.1x in FY14 (FY13: INR11.6bn, D/E ratio at 0.2x).

What needs tracking?

EBITDA growth in constant currency stood at 15.2% vis-à-vis reported 32.3%.

Lupin invested INR3.0bn in LAHSA in FY14, which posted loss of INR1.3bn in FY14 (FY13: loss of INR1.2bn).

Through LAHSA and LHBV, Lupin acquired four more subsidiaries that posted combined loss after tax of INR342.0mn.

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Link
https://www.edelweiss.in/research/Annual-Report-Analysis--Lupin/27182.html