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India, milestone buoy numbers but US below-par

About the stock: Lupin is a multinational pharma company engaged in manufacturing & marketing branded & generic formulations, APIs, biotech products as well as OTC medicines across multiple dosage forms & therapeutic categories.

* It is the third largest generic player (by prescriptions) in the US with 168 generic products (market leader: 52 products; Top 3: 122 products) along with being sixth largest company in Indian pharmaceutical market

* Lupin is the largest manufacturer of anti-TB drugs in the world and enjoys global leadership in anti-TB & Cephalosporins

Q1FY22 Results: Lupin reported decent Q1FY22 results.

* Sales were up 21% YoY to | 4270 crore

* EBITDA in Q1FY22 was at | 927 crore, up 90% YoY with margins at 21%

* Consequent adjusted PAT was at | 542 crore (up 407% YoY)

What should investors do? 

Lupin’s share price has de-grown by ~0.6x over the past five years (from ~| 1739 in July 2016 to ~| 1107 levels in July 2021).

* We retain HOLD rating on the stock

Target Price and Valuation: We value Lupin at | 1025 i.e. 22x P/E on FY23E EPS

Key triggers for future price performance:

* Its tie-ups with Eli Lilly, Boehringer for anti-diabetics and with MSD for pneumonia vaccines will help bolster domestic franchise

* Lupin plans to deepen its presence in Derma & women’s health segments apart from continued respiratory traction in the US

* Lupin’s US business comprises one of the largest ANDA pipelines that include 437 filed ANDAs and 149 pending approvals including 45 FTFs

Alternate Stock Idea: Apart from Lupin, in our healthcare coverage we like Cipla.

* Cipla is a global pharma company with over 1,500+ products in 65 therapeutic categories, with over 50 dosage forms

* BUY with a target price of | 1205

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