Lupin's Q4 Net Profit Falls Short, Lupin Share Price Down by 5%

Lupin share price fell approximately 5% on May 7, following the announcement of its Q4 FY24 earnings, which did not meet expectations due to rising costs of raw materials. As of 1:45 pm IST, Lupin shares were priced at ₹1,583.15 on the NSE. The pharmaceutical company reported a net profit of ₹359.4 crore for the March quarter, significantly below the forecast of ₹498.9 crore by CNBC-TV18. Nonetheless, this represents a 52% increase from the previous year's figure of ₹235.96 crore for the same quarter.

Market expectations were set higher for the drugmaker's net profit, largely fueled by optimism over strong sales projections for its leading asthma medication, Spiriva.

Lupin's stock Revenue increased by 13% to ₹4,895.11 crore, up from ₹4,330.3 crore in the same period last year. However, this figure fell short of the ₹5,057.70 crore anticipated by CNBC-TV18. In terms of operational performance, the drugmaker saw a significant improvement, with EBITDA margins rising by 641 basis points to 20.4% in the fourth quarter. This substantial growth in margins is largely due to the inclusion of the high-margin asthma drug Spiriva in its product mix.

"While FY24 has been a year of resurgence for the company, we look forward to an even stronger FY25 driven by growth across our key geographies and consistent improvement in our margins," said Nilesh Gupta, Managing Director, Lupin in a press statement. "Profitability of the US business improved Q-o-Q," said Vinita Gupta, CEO in an interaction with CNBC TV 18 today. "We expect to maintain $200+ million per quarter," she added.

“We continue to move forward with sustainable and profitable growth and delivered another strong set of numbers in Q4. Our US sales remain healthy driven by inhalation products, and our India formulation business is delivering ahead of market," said Nilesh Gupta, Managing Director, Lupin Limited in a press statement.

"While FY24 has been a year of resurgence for the company, we look forward to an even stronger FY25 driven by growth across our key geographies and consistent improvement in our margins," he added.

The company reported that sales from its Indian formulations for FY24 reached ₹6,656.4 crore, marking a 9.6% increase from ₹6,075.9 crore in FY2023, and constituting 34% of Lupin’s total global sales. For the fourth quarter of FY2024, sales amounted to ₹1,601.5 crore, experiencing a decline of 7.2% from ₹1,725.1 crore in the previous quarter. However, this figure represents an 8.3% increase from ₹1,478.6 crore in the same quarter of the previous year, accounting for 33% of Lupin’s global sales.

According to the company's management, there are new products in development, including ophthalmic and diabetes products such as liraglutide. In a recent discussion with CNBC TV 18, Lupin's CFO, Ramesh Swaminathan, stated that the company anticipates maintaining a 20% margin in the upcoming quarters.

Nomura is optimistic about Lupin's future, suggesting that new product launches in the US and stringent cost management could lead to earnings surpassing the brokerage's current predictions. Nomura maintains a 'Buy' recommendation on Lupin's stock with a price target of ₹1,949. The brokerage highlighted the impressive margin expansion that exceeded its estimates by 8%, particularly noteworthy given the seasonally weak quarter and increased spending on research and development. Looking forward, the management projects a robust growth trajectory for the company.

Analysts remain optimistic about Lupin's future due to its promising sales outlook in the U.S. During the quarter, Lupin filed one Abbreviated New Drug Application (ANDA), received approval for 12 ANDAs from the U.S. FDA, and launched six products in the U.S. market. The company now offers a portfolio of 161 generic products in the United States.