For 3QFY2016, Lupin posted results more or less in line with our expectations. A
higher than expected other income aided the net profit to come in higher than
our expectation. The company posted sales of Rs3,358cr (V/s Rs3,400cr expected),
a growth of 6.8% yoy. On the operating front, the OPM came in at 20.2% (V/s
20.5% expected) V/s 27.0% in 3QFY2015. R&D expenditure during the quarter
was 11.7% of sales V/s 8.3% of sales in 3QFY2015. The net profit came in at
Rs530cr (V/s Rs469cr expected) and V/s Rs601cr in 3QFY2015, a yoy dip of 11.9%.
The higher than expected PAT is on back of higher other income yoy, which came
in at Rs263cr V/s Rs116.1cr in 3QFY2015. Overall, we are Neutral on the stock.
Results below expectations: For 3QFY2016, Lupin posted results more or less in
line with our expectations. A higher than expected other income aided the net
profit to come in higher than our expectation. The company posted sales of
Rs3,358cr (V/s Rs3,400cr expected), a growth of 6.8% yoy. On the operating front,
the OPM came in at 20.2% (V/s 20.5% expected) V/s 27.0% in 3QFY2015. R&D
expenditure during the quarter was 11.7% of sales V/s 8.3% of sales in 3QFY2015.
The net profit came in at Rs530cr (V/s Rs469cr expected) and V/s Rs601cr in
3QFY2015, a yoy dip of 11.9%. The higher than expected PAT is on back of higher
other income yoy, which came in at `263cr V/s Rs116.1cr in 3QFY2015.
Outlook and valuation: We expect Lupin to post a CAGR of 14.6% in net sales
to Rs16,561cr. We expect an earnings CAGR of 13.1% over FY2015-17 to
Rs68.3/share. Currently, the stock is trading at 34.3x and 25.3x its FY2016E and
FY2017E earnings, respectively. We remain Neutral on the stock.
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