Stock in Action - Lupin

Lupin Share Movement of Day 

Highlights

1. Nifty 50 index represents top 50 companies listed on National Stock Exchange of India.

2. Sensex is benchmark index of Bombay Stock Exchange comprising 30 well-established & financially sound companies.

3. Stock of day is Lupin after 5 % surge due to double upgrade by Kotak Institutional Equities.

4. Best stocks to invest in 2024 include Lupin with promising product pipeline & strong US sales.

5. Top pharmaceutical stocks to watch include Lupin given its strong performance & market potential.

6. Lupin share price prediction by Kotak Institutional Equities sees target of Rs 1805 reflecting 11 % upside.

7. High growth stocks 2024 list includes Lupin with significant gains expected from its US portfolio.

8. Kotak Institutional Equities stock recommendations include upgrading Lupin from sell to add.

9. Lupin stock news highlights 5 % jump following positive upgrade & raised price target by Kotak.

10. Top performing stocks in India include Lupin which has nearly tripled its value over past two years.

Why Lupin Share is in Buzz?

Lupin shares surged 5 % on July 4 following significant double upgrade by Kotak Institutional Equities from 'sell' to 'add' rating. brokerage firm’s optimistic outlook stems from Lupin's strong portfolio & promising product lineup, especially in US market. new price target of ₹1,805 reflects approximately 11 % upside potential from stock’s previous close, despite 88 % gain in past year. This upgrade highlights Lupin’s potential for continued robust performance & has sparked considerable interest among investors.

Why Should I Invest in Lupin Shares?

Strong US Portfolio & Sales Trajectory

Kotak Institutional Equities’ bullish stance is primarily due to Lupin's strong US portfolio, which is expected to drive significant growth in FY25 & FY26. brokerage anticipates Lupin's US sales to grow 12 % year-on-year to $914 million in FY25 & another 11% to $1,013 million in FY26. This optimism is supported by stable US generics pricing environment & lineup of critical contributors such as Spiriva & Albuterol. Additionally, launch of Tolvaptan in FY26, with estimated revenue contribution of $106 million, is expected to exceed Street estimates & significantly boost Lupin's financial performance.

Promising Product Pipeline

Lupin has robust product pipeline, including key drugs like Myrbetriq & Tolvaptan, which are anticipated to be pivotal for company's success in upcoming fiscal years. Tolvaptan, expected to launch in Q1 FY26, addresses hyponatremia in patients with heart failure or syndrome of inappropriate antidiuretic hormone, & has high potential market due to Lupin’s 180-day sole exclusivity starting April 2025. Myrbetriq, used to treat overactive bladder, & other products in Lupin’s respiratory portfolio are expected to drive substantial revenue growth.

Upgraded Earnings Estimates

Kotak has raised its FY25-27 earnings per share (EPS) estimates for Lupin by 3-16 percent, with FY25/26 EPS now projected to be 6/13 % higher than Street estimates. This increase is attributed to higher US sales & improved EBITDA margins, which are expected to expand by 370 basis points over FY2024-26. revised price target of ₹1,805, up from ₹1,400, reflects nearly 30 % increase, indicating strong growth potential despite significant gains already seen over past year.

Limited Earnings Dip & Competitive Edge

Despite anticipated declines in Albuterol sales, Kotak believes that Lupin will experience only limited earnings dip in FY27 following strong FY26. firm's competitive edge is bolstered by portfolio of products that will continue to perform well even amid challenges. Additionally, brokerage sees potential for further positive surprises if Lupin gains more market share in Spiriva & faces less competition in Albuterol than expected.
Historical Performance & Market Confidence

Lupin's stock has nearly tripled in last two years, with remarkable 180 % increase since June 2022 & 100 % gain over past year. consistent upward trajectory & strong market performance underscore investor confidence & company’s solid foundation. recent upgrade & positive outlook from Kotak Institutional Equities have further reinforced this confidence, making Lupin attractive investment opportunity.

The Stock of Lupin has Performed Fairly Well: Do Finances Have Impact?

Growth in Lupin's Earnings Furthermore, 13% ROE
Lupin's ROE doesn't seem like anything to talk about at first glance. However, more thorough examination reveals that company's ROE is comparable to 11% industry average. Nevertheless, Lupin's net income increased at pace of 18%, which is respectable rise. Given that ROE is not very high, we believe that there may be more factors driving company's growth that are worth considering. For instance, it's feasible that business has low payout ratio or that management has made some wise strategic choices.
Next, we looked at how Lupin's net income growth compared to industry. We discovered that, over same period, company's growth rate was comparable to industry average of 17%.

Is Lupin Making Good Use of Its Retained Earnings?

Lupin's low three-year median payout ratio of 22% (or retention ratio of 78%) likely explains its respectable earnings growth, indicating that company is using majority of its profits to expand.
In addition, Lupin has been generating dividends for minimum of ten years. This demonstrates business's dedication to paying its shareholders portion of its profits. According to current expert predictions, within following three years, company's payout ratio is predicted to decrease to 13%. Therefore, estimated increase in company's future ROE to 16% over same period can be explained by planned decline in Lupin's payout ratio.

Conclusion

Investing in Lupin shares is supported by company's strong US portfolio, promising product pipeline, upgraded earnings estimates, & competitive edge in market. recent upgrade by Kotak Institutional Equities & potential for substantial growth in upcoming fiscal years make Lupin compelling choice for investors seeking robust returns in pharmaceutical sector. Overall, Lupin's business appears to have some beneficial qualities. Even with poor ROE, company has seen significant increase in earnings thanks to high rate of reinvestment. Additionally, we looked at most recent analyst projections & discovered that company's predicted earnings growth is comparable to its present growth rate.