Ace investor Rakesh Jhunjhunwala holds 72.5 lk shares of Lupin or 1.6% stake in the company. The value of his holding in Lupin is Rs 775 cr. The market cap of Lupin is Rs 48000 cr. The current share price of Lupin is Rs 1060, up Rs 7.5 or 0.7%. Notably, the Big Bull Rakesh Jhunjhunwala had been extremely bullish on Lupin. Considering that Rakesh Jhunjhunwala portfolio is always eyed by investors for clues, how well will this stock perform is something that is on their mind too.   

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Kotak Institutional Equities says that Lupin remains well-positioned to deliver strong earnings growth over the medium term with multiple drivers in place, including further ramp-up in albuterol, revival of domestic growth after a weak 1H of FY21 and operating leverage benefits aiding margin expansion. Progress on other inhalation assets, filing of biosimilars in the US and potential resolution of warning letters in the second half of FY22 will further enhance long-term earning visibility. Kotak Institutional Equities Revise Fair Value to Rs 1200. They maintain ADD rating on Lupin.

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Lupin has demonstrated impressive execution in ramping up ProAir inhaler over the past three months and has gained 8% market share of the generic albuterol market. The company remains on track to ramp up Proair volumes to >10 mn units in the next few months. We expect absence of Perrigo to persist in the near term providing further opportunity to gain market share. Pricing environment remains fairly stable and we believe albuterol could turn out to be >US$100 mn opportunity for Lupin over FY2022/23E, positively surprising Street’s estimates and driving revival in US business. With metformin re-launch, market share gains in levo and contribution of other products such as Tykerb, we expect Lupin to return to >US$200 mn quarterly run-rate by Q4 FY21.

Apart from Proair, we expect progress on multiple products over FY2022/23E. Among respiratory assets, we expect approval of Fostair (EU) by first half of CY21, potential approval of Dulera in first half FY22 and litigation/approval progress on Spiriva. Lupin has also made advancement on the biosimilars front with partner Mylan launching biosimilar Enbrel in 3 EU countries and more countries likely to follow over the next six months. Filing of pegfilgrastim (US) by first half of CY21 and progress on Lucentis will further validate Lupin’s capabilities in biosimilar space and enhance growth visibility beyond FY2023E. While observations on Somerset inspection have disappointed, we see limited impact from the same and expect resolution of Goa/Indore by the second half of FY22 once FDA resumes overseas inspections. With domestic growth reviving after a weak first half and scale up of US revenues, we believe Lupin is well-positioned for a strong recovery in margins and return ratios over the next two years.

Kotak Institutional Equities tweak our FY2022/23E estimates by 1-2% to factor in higher albuterol sales, which is partially offset by lower launches given delay in Goa/Indore resolution. Kotak Institutional Equities numbers do not factor in upside potential from biosimilars. Kotak Institutional Equities revise Fair Value of Lupin to Rs 1200 (from Rs 1000 earlier) based on 23X FY2023E EPS. ADD