Lupin Share Price Rises 5% on Kotak Institutional Equities' 'Add' Double Upgrade

Lupin shares rose by 5% on July 4 after brokerage firm Kotak Institutional Equities upgraded the stock to an 'add' rating from the previous 'sell' call. KIE's optimism regarding Lupin is driven by the drugmaker's robust US portfolio, which positions it to potentially exceed market expectations in the US for FY25 and FY26.

KIE's positive outlook for Lupin for the coming fiscal years has attracted investors to buy the stock. As of 10:17 am IST, Lupin share price were trading at ₹1,704.20 on the NSE.

Factoring that in, the brokerage also raised its price target for Lupin by nearly 30% to ₹1,805, indicating a potential upside of around 11% from the previous close. This is despite the stock having delivered over 88% gains in the last year.

Kotak believes that Lupin has a range of products in the pipeline, which will help ensure a limited dip in earnings in FY27 following a strong FY26, even while accounting for a sharp decline in Albuterol sales over the next couple of years.

Kotak expects Lupin's robust US sales trajectory to continue amid a stable US generics pricing environment, despite anticipated declines in Albuterol and Suprep in FY25. While Spiriva and Albuterol will remain significant contributors to Lupin's earnings in FY25 and FY26, the brokerage believes that Myrbetriq and Tolvaptan will make the next fiscal remarkable for the drugmaker. Tolvaptan is expected to be launched in the first quarter of FY26.

Spiriva and Albuterol are drugs from Lupin's respiratory portfolio, while Myrbetriq is used to treat overactive bladder. On the other hand, Tolvaptan is used to treat hyponatremia (low sodium in the blood) in patients with heart failure or syndrome of inappropriate antidiuretic hormone.

The brokerage also believes that the market is underestimating the potential revenue contribution from Tolvaptan. "With US$1.2 billion US sales reported by Otsuka as of 2023 and Lupin's 180-day sole exclusivity from April 2025, we believe the opportunity from Tolvaptan in FY26, coming around $106 million will be much above Street’s estimates," KIE stated.

Consequently, Kotak anticipates Lupin's US sales to grow by a healthy 12% year-on-year to $914 million in FY25 and 11% to $1,013 million in FY26. Additionally, KIE sees the potential for further positive surprises if Lupin continues to gain market share in Spiriva and if the impact from Albuterol competition is lower than expected.