Motilal Oswal has given Neutral recommendation for Lupin with a target price of Rs. 1040 in its research report issued on Aug 11, 2021

Motilal Oswal’s research report on Lupin

Lupin (LPC) delivered a significant miss on 1QFY22 core earnings, weighed by lower margins in the US segment. This was offset, to some extent, by a milestone payment of USD50m on the clinical progress of the MEK inhibitor from Boehringer Ingelheim. LPC continues to build a complex product pipeline in the Inhalers/Injectables space and is also exploring a potential spin-off of the NCE business. We cut our FY22E/FY23E EPS by 22%/14%, factoring in a) increased competition in g-Famotidine, b) the failure to supply products due to supply disruption on account of COVID, c) the deferral of sales of certain products, and d) reduced operating leverage.

Outlook

We value LPC at 24x 12M forward earnings to arrive at TP of INR1,040. We maintain Neutral as current valuations adequately factor in potential niche launches over the next 12–15M.

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