Motilal Oswal has given Neutral recommendation for Lupin with a target price of Rs. 990 in its research report issued on Dec 14, 2021

Motilal Oswal’s research report on Lupin

After almost 4.5 years of regulatory hurdles, LPC received a favorable classification (Voluntary Action Indicated or VAI) for its Goa facility from the USFDA. This is a big relief from a compliance standpoint, given the reasonable contribution in the base business as well as double digit ANDAs pending approval from the Goa site. -We expect 21% earnings CAGR over FY21-23E and raise our 12-month forward P/E to 25x (to factor Goa compliance) from 24x earlier and arrive at our TP to INR990/share. While the regulatory clearance removes a key overhang on the Goa facility, we maintain our Neutral rating as valuation leaves limited upside from current levels.

Outlook

We raise our P/E multiple to 25x (from 24x earlier) to factor resolution of regulatory issues at the Goa site and arrive at our TP of INR990/share. We maintain our Neutral rating as current valuations adequately factor in healthy earnings CAGR as well as a favorable regulatory outcome.

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