Lupin slips 9%, hits 2-year low on disappointing March quarter results

Shares of Lupin hit two-year low of Rs 622 after they fell 9 per cent on the BSE in Thursday's intra-day on the back of a disappointing set of numbers for March quarter (Q4FY22). The pharmaceutical company reported a consolidated loss of Rs 512 crore, on higher manufacturing cost as against a consolidated profit of Rs 464 crore in the year-ago quarter (Q4FY21) and Rs 549 crore in the previous quarter (Q3FY22).

The stock was at its lowest level since April 2020. At 09:18 am, it was 7 per cent lower at Rs 635.25, as compared to 1.9 per cent decline in the S&P BSE Sensex. Trading volumes on the counter more-than-doubled with a combined 1.1 million shares having changed hands on the NSE and BSE till the time of writing of this report.

In Q4, Lupin’s revenues grew 3 per cent year on year (YoY) to Rs 3,883 crore, wherein domestic formulations grew 5 per cent YoY to Rs 1,351 crore, while US revenues de-grew 5 per cent YoY to Rs 1,416 crore. Earnings before interest, taxes, depreciation, and amortization (EBITDA) de-grew 68 per cent YoY to Rs 226 crore. EBITDA margin was down 1287 bps YoY at 5.8 per cent.

The management said the reported quarter was challenging with headwinds in the US on account of price erosion, and inflation in input materials and freight. "We are focused on optimizing operating expenses and spend and ensuring the evolution of our complex generic platforms along with global portfolio maximization while doubling down on markets like India," the management said.

"Lupin's performance was skewed on revenues front amid US and India posting lower than expected sales while RoW and South Africa saw better than anticipated traction this quarter. Margins and profitability were a significant miss due to very high ex-R&D other expenditure (up 26 per cent YoY) and impairment charges of Rs 129 crore in respect of acquired IPs consequent to adverse market conditions," ICICI Securities said in a note.

The brokerage firm believes resolution of warning letters and clearance of Official Action Indicated (OAIs) status on plants could be the near term trigger along with progress on the margins front.