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Lupin: US Business Drives Growth - Views on News from Equitymaster
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Lupin: US Business Drives Growth
Mar 8, 2017

Lupin has announced its 3QFY17 results. Net sales have grown by 31.5% YoY and net profits have surged by 20.7% YoY. Here is our analysis of the results.

Performance summary
  • Top line witnessed a healthy growth on the back of robust performance of US business (up 57.6%) and other international geographies. Growth in the US market continued to be driven by key products vis Glumetza and Fortamet. As the competition increases in these products, Lupin's revenues will get impacted going forward. Notably, Asia pacific region, Latin America and Rest of the World markets witnessed growth of 21% YoY for the quarter. India business grew by 11.9% YoY for the quarter. Growth was impacted due to demonetisation during the quarter.
  • Better product mix, with low competition launches in US helped in better operating margins. On YoY basis, operating margins have improved by 2.6%.
  • Net profits increased by 20.7% YoY for the quarter. This was despite, sharp surge in the depreciation and interest costs. On the other hand, bottom line was also helped by better other income which included forex gain of Rs 740 m.

    Financial performance: A snapshot
    (Rs m) 3QFY16 3QFY17 Change 9MFY16 9MFY17 Change
    Net sales 33,503 44,049 31.5% 96,489 129,579 34.3%
    other operating income 1,974 779 -60.5% 4,096 2,831 -30.9%
    Expenditure 26,782 32,670 22.0% 77,039 96,283 25.0%
    Operating profit (EBDITA) 8,695 12,158 39.8% 23,545 36,127 53.4%
    EBDITA margin (%) 24.5% 27.1% 23.4% 27.3%
    Other income 653 1,036 58.6% 1,663 1,525 -8.3%
    Interest (net) 92 459 399.2% 284 1,042 266.7%
    Depreciation 1,114 2,309 107.3% 3,384 6,448 90.5%
    Profit before tax 8,142 10,425 28.0% 21,540 30,162 40.0%
    Minority Interest 12 0 6 -29
    Tax 2,909 4,095 40.8% 6,406 8,418 31.4%
    Profit after tax/(loss) 5,246 6,331 20.7% 15,128 21,772 43.9%
    Net profit margin (%) 15.7% 14.4% 15.7% 16.8%
    No. of shares (m) 451.0
    Diluted earnings per share (Rs) 52.9
    Price to earnings ratio (x)* 27.0

    *based on trailing 12 months earnings


    Business Mix
    (Rs m) 3QFY16 3QFY17 Change 9MFY16 9MFY17 Change
    Domestic Formulations 8,860 9,912 11.9% 26,447 29,183 10.3%
    (% of revenues) 26.4% 22.5% 27.4% 22.5%
    Export Formulations 21,808 31,453 44.2% 60,713 91,924 51.4%
    (% of revenues) 65.1% 71.4% 62.9% 70.9%
    API 2,835 2,684 -5.3% 9,329 8,472 -9.2%
    (% of revenues) 8.5% 6.1% 9.7% 6.5%
    Total 33,503 44,049 31.5% 96,489 129,579 34.3%
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