Lupin (Buying Range: |590-|565)
• Lupin is well poised to register strong growth in the US generic
space as the gap of filing and launches (176 approvals and just 42
launches cumulatively) assures sales traction for a sizable future,
add to this, the potential upsides from FTFs and limited
competition products (at least 10). The branded space is expected
to get a boost from the launch of Suprax drops and chewable
version.
• Things are also improving in Japan where we expect
improvement in gross margins once product supplies from Goa
facility kick in. The India business is also slated to grow above
industry average with chronic focus and new launches
• The management has guided for ~100 bps improvement in
EBITDA margins every year on the back of continuous
improvement in product mix and cost rationalisation. We expect
sales, EBITDA and PAT to grow at a CAGR of 24%, 27% and 29%,
respectively, in FY12-14E. The stock is currently quoting at 18x
FY14E EPS of | 32.5.
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