- 19 May 2022
- ICICIdirect Research
Miss on estimates, Margins below-par
LUPIN - 2240 Change: 46.45 (2.12 %)News: Revenues grew 3% YoY to Rs. 3883 crore, wherein domestic formulations grew 5% YoY to Rs. 1351 crore. US revenues de-grew 5% YoY to Rs. 1416 crore while South Africa business remained flat YoY to Rs. 210 crore and RoW markets expanded 35% YoY to Rs. 470 crore. API de-grew 14% YoY to Rs. 220 crore (I-direct estimate: Rs. 268 crore). EBITDA margins was down 1287 bps YoY at ~5.8% against I-direct estimate of 13.4%. EBITDA de-grew 68% YoY to Rs. 226 crore (I-direct estimate: Rs. 539 crore). Lupin posted adjusted loss of Rs. 525 crore (I-direct estimate was profit of Rs. 245 crore) vs. adjusted profit of Rs. 460 crore in Q4FY21. Delta vis-à-vis EBITDA was mainly due to higher interest, depreciation and tax expense along with lower other income in this quarter. The board of directors recommended a dividend of Rs. 4 per equity share
Views: Lupin’s performance was skewed on revenues front amid US and India posting lower than expected sales while RoW and South Africa saw better than anticipated traction this quarter. Margins and profitability were a significant miss due to very high ex-R&D other expenditure (up 26% YoY) and impairment charges of Rs. 129 crore in respect of acquired IPs consequent to adverse market conditions. The current quarter was challenging with headwinds in US on account of price erosion, and inflation in input materials and freight. We believe, resolution of warning letters and clearance of Official Action Indicated (OAIs) status on plants could be the near term trigger along with progress on the margins front
Impact: Negative