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Recommendation Rationale

* Strong Set of Results: Lupin reported a strong performance this quarter, driven by outperformance in the US business led by high-margin complex generics (notably gTolvaptan) and robust growth across emerging markets. Strong gross margin expansion translated into a sharp EBITDA and PAT beat. Revenue stood at Rs 7,048 Cr (+24% YoY), well above estimates, while EBITDA rose 63% YoY to Rs 2,341 Cr with margins at 33.2%. Adjusted PAT came in at Rs 1,485 Cr (+73% YoY).

* US Market: Sales stood at $315 Mn (+43% YoY), driven by higher-than-expected gTolvaptan contribution along with continued strength in gMirabegron and gSpiriva. Management expects US revenues to moderate but remain healthy at $275–300 Mn per quarter in H2FY26, despite the expiry of the 180-day gTolvaptan exclusivity in Q3, supported by limited competition due to REMS complexity and market stickiness. The company launched Glucagon in Aug’25 and Liraglutide in Oct’25. It is upscaling its portfolio towards a higher share of complex Gx (expected to rise to 55% by FY30), led by inhalation, injectables, and ophthalmics.

* Upcoming Pipelines & Opportunities: Lupin’s new launch momentum remains aligned with its strategic focus on complex and higher-margin products, enhancing medium-term growth visibility. In Q2, the company gained from the ramp-up of recent US launches such as gTolvaptan and gMirabegron, while approvals for gRisperdal Consta and the launch of gGlucagon demonstrate steady progress in developing a differentiated injectable/depot portfolio. Going forward, key growth drivers include the planned launch of gVictoza in Oct’25 and the expected approval of gSaxenda, alongside progress on gDulera (targeted for H2FY27/early FY28) and platform-based inhalation filings (Respimat/Ellipta) in FY26E. The injectables pipeline of 40+ assets is expected to contribute ~$100 Mn annually over the next 3–4 years post the Nagpur facility scale-up. The biosimilars portfolio provides long-term upside, with bPegfilgrastim launch expected in FY26, followed by ophthalmology assets bRanibizumab and bAflibercept from FY27–FY29.

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