IGI Logo

gSpiriva sees quick ramp-up

Strong beat in Q3FY24

Lupin’s (LPC IN) Q3 results were well ahead of our expectations – Revenue, EBITDA and PAT beat our estimates by 7%, 41% and 92%, respectively. The upside came in mostly from faster ramp-up in gSpiriva product in the US, but also supported by stronger growth in most other geographies. We estimate ~USD 25mn high-margin gSpiriva sales in Q3.

US generics – Momentum to continue

Prescription share in gSpiriva has quickly ramped up to ~30%. LPC targets to take it to ~40%. It does not expect additional competition in the product till FY27. Entry of authorized generic in the market could be a major risk though. Ramp-up in recently-launched gNascobal and gProlensa could also contribute to growth. gMyrbetriq with 180-day exclusivity could be another major product that could add to growth in FY25. The management also highlighted other interesting products such as gJynarque and gRisperdal Consta that could add to revenues in the next two years.

Other businesses – On strong footing     

India business growth at 13.4% YoY surprised positively. We expect 10% sustainable growth in this business. EMEA business growth at 36% YoY and RoW business growth at 26% YoY also were ahead of our estimates – we expect these to grow at 9-11% on a sustainable basis.

Margin improvement to sustain

LPC surpassed its margin guidance to register 19.7% EBITDA margin in Q3. The management has not guided for further sharp improvements hereon, but may target to sustain the levels and gradually improve.

Valuations: Reiterate Accumulate with a higher TP of INR 1,820

We raise FY24E core EPS by 20% and FY25E-26E core EPS by 7-8%. LPC trades at 32.4x our FY25E core earnings. We raise TP to INR 1,820 from INR 1,383, on 33x FY26E core EPS plus cash per share. Potential authorized generic competition in gSpiriva is the key risk.

Please refer disclaimer at Report
SEBI Registration number is INH000000933