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Weak set of numbers for the quarter

* Lupin (LPC)’s 4QFY22 revenue rose 2.6% YoY to ~INR39b (our est. at INR39b).

* The US sales declined 5.3% YoY to INR14b (down 7% in CC to USD181m; 37% of sales). The US sales dropped 10% sequentially from USD202m in 3QFY22.

* API sales declined 14% YoY to INR2.2b (5.7% of sales); Domestic Formulation (DF) sales grew 5% YoY to INR13.5b (35% of sales); EMEA sales rose 8.6% YoY to INR4b (10.5% of sales) and Growth Market sales increased 26% YoY to INR3.8b (10% of sales).

* Gross margin (GM) for the company contracted 530bp YoY to 58% due to change in product mix.

* Adjusting for reversal of litigation-related one-time expense (of INR12m), EBITDA margin contracted at a higher rate of 1,280 bp YoY to 5.9% (our est. at 13.4%), due to reduced operating leverage (other expense/employee cost +650bp/+120bp YoY as a % of sales, respectively).

* EBITDA declined 67.8% YoY to INR2.3b (our est. at INR5.3b).

* LPC has taken an expense on account of the impairment of Gavis IPs to the tune of INR1.3b.

* Adjusting for the aforementioned exceptional items, LPC reported a loss of INR24m, due to higher tax outgo.

* For FY22, sales grew 6.2% YoY to INR160b while EBITDA/Adj. PAT declined 23.3%/30.8% YoY to INR19.4b/INR8.2b.

Other highlights:

* LPC filed 10 ANDAs in the quarter; it received two ANDA approvals from the USFDA and launched two products in the quarter in the US market

* LPC launched one brand in the Anti-Diabetic therapy, one brand in the AntiViral therapy and one brand in the VMS therapy in 4QFY22 in India.  Capex stood at INR1.6b for the quarter.

* Net debt at the end of 4QFY22 stood at INR19.2b v/s INR22.5b QoQ

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