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Strong near-term momentum

Lupin (LPC IN) reported in-line Q4FY25 with revenue, EBITDA and PAT within 1-2% of our estimates. US revenue grew 14% YoY, helped by gSpiriva, gMyrbetriq and gPred Forte. These high margin products also drove EBITDA margin expansion of 270bp YoY. Management says they will continue the sales of gMyrbetriq despite the recent temporary setback in patent litigation. Recently launched gJynarque will add to US growth in H1FY26. Other businesses delivered mixed performance – growth in the domestic business was muted; RoW formulations were in line and EMEA superior. While there are several moving parts to the business from a two-year perspective, management targets to sustain growth and improve margin in the medium term. We raise our FY26E core EPS by 20% as we build in continued gMyrbetriq for the full year; we also raise FY27E core EPS by 3%. We retain Accumulate with a TP of INR 2,392

Strong FY26 in the US; but could soften beyond that: With continued gMyrbetriq sales, growth in gSpiriva sales and launch of gJynarque, FY26 will be robust for US business. However, this will likely soften during FY27 /FY28 – gJynarque market exclusivity is only for 180 days and gSpiriva could see new competition in late FY27 or FY28. The outlook for gMyrbetriq is more complicated – a verdict of non-infringement in the court trial scheduled for February 2026 could keep the opportunity big for the next 2-3 years; a verdict of invalidity or a verdict of validity + infringement could cause a sunset on the opportunity by end-FY26. A verdict of validity + infringement could also pose risk of liability of damages for patent infringement.

Medium-term pipeline robust in the US: Although it may not be large enough to offset potential loss of sales from gMyrbetriq and gSpiriva, the US pipeline has a slew of valuable products that could hit the market during FY27-30. These include gGlucagon, gRisperdal Consta, gDulera, gVictoza and gSaxenda. The biosimilar pipeline that includes bNeulasta and bLucentis adds to it. gJuluca could be an interesting exclusive launch in FY28. In addition, there are a few undisclosed inhalation products in the pipeline as well.

Double-digit growth guidance for India: The domestic formulations business growth of 6.2% YoY in Q4 was weaker than expected. FY26 growth at 8.4% is good, given slow growth in the overall market. Management has set double-digit growth target for FY26. We expect the EMEA and ROW businesses to continue to grow in the high single digits to low double digits. Semaglutide launch could be a growth driver for all these markets, starting in CY26.

Retain Accumulate with a TP of INR 2,392: We raise our FY26E core EPS by 20% as we build in continued gMyrbetriq for the full year; we also raise FY27E core EPS by 3%. We introduce FY28 estimates. LPC trades at 19.9x FY26E core earnings and 25.1x FY27E core earnings. We retain Accumulate with a TP of INR 2,392 on 29.8x FY27E core earnings plus cash per share of INR 39,8. Authorized generic competition in gSpiriva and additional competition in gMyrbetriq are key risks. Unexpected delay in key launches in the US could also be a risk

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