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We maintain our Buy rating on Lupin and revise our target downwards to Rs 1,300 (earlier Rs1,880), based on 23x March’19 EPS of Rs56.5. Lupin’s Q4FY17 results were lower than our and consensus estimates due to the pricing pressure in the US generic market and muted guidance by the management.
The pharma major reported revenue growth of 1% YoY, 1290bps decline in margin to 18.4%, and 49% decline in net profit. In addition, the company’s Indore facility has been issued Form 483 with six observations by the US FDA. We believe the company’s robust growth across key markets coupled with a strong pipeline of 154 pending ANDAs will drive future growth. Key positive risk to our assumptions would be strong growth in the US market and key negative risk would be slower growth in the domestic market.
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