Lupin shares fall 2% in strong market post September quarter results

Shares of Lupin dipped 2 per cent at Rs 928 on the BSE on Thursday in an otherwise strong market after the drug maker reported 50 per cent year-on-year (YoY) decline in profit after tax at Rs 211 crore in the September quarter (Q2FY21), due to lower operational performance, lower other income and higher tax rate.

The stock hit an intra-day low of Rs 922 on the BSE. In comparison, the S&P BSE Sensex was up 1.6 per cent at 41,245, at 01:24 pm.

In Q2FY21, the company’s revenues declined 12 per cent YoY to Rs 3,835 crore mainly due to Kyowa divestment. US revenues grew 5.6 per cent YoY to Rs 1,398 crore whereas domestic formulations remained subdued de-growing 0.7 per cent YoY to Rs 1,332 crore. However, API segment grew a robust 22.5 per cent YoY to Rs 374 crore during the quarter.

Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins contracted 164 basis points YoY to 15.2 per cent due to lower gross margins and higher other expenses. The management expects to sustain the momentum on margin improvement led by optimization efforts underway and robust growth in our key businesses.

Lupin’s Q2FY21 revenues and operational performance were in-line with our estimates while profitability was below expectations due to lower other income and a higher tax outgo, ICICI Securities said in a note.

Resolution of warning letters and clearance of official action indicated (OAIs) status on plants could be the near term overhang along with progress on the margin front. Barring Covid-19 impact, growth in India remains consistent but remains lumpy for Asia Pacific (APAC). Like other pharma majors, Lupin has also chalked out a product and cost rationalisation drive. The result of this drive could be visible two to three years down the line, it said.