Lupin stock rallies 227% in 15 months; set to hit a new high after 9 years

Lupin hit a multi-year high of Rs 2,119, up 3 per cent in intra-day trade, inching close to its record high level of Rs 2,127 touched on October 6, 2015

Shares of Lupin hit a multi-year high of Rs 2,119, gaining 3 per cent on the BSE in Friday’s intra-day trade, extending its rally after the company posted strong earnings in June quarter (Q1FY25), and healthy growth outlook.

Thus far in the calendar year 2024, Lupin has outperformed the market by surging 61 per cent, as compared to 10.3 per cent rise in the BSE Sensex. In the past 15 months, the stock zoomed 227 per cent. It is trading close to its record high level of Rs 2,127 touched on October 6, 2015.

Lupin is a leader in generics, branded generics, complex generics, active pharmaceutical ingredients (APIs), biosimilars and specialty medicines. With a specialised portfolio that includes branded and generic formulations, biologic products and API, Lupin enjoys leadership positions in India, the US and several other key markets focused on therapeutic areas such as respiratory, cardiovascular, anti-diabetic, antiinfective, gastrointestinal, central nervous system and women’s health.

In past three trading days, the stock price of Lupin rallied 11 per cent after the company reported a whopping 77.2 per cent year-on-year (YoY) and 119 per cent quarter-on-quarter (QoQ)  increase in profit after tax (PAT) at Rs 801 crore for Q1FY25.

The company's revenue from operations grew by 16.2 per cent Y-o-Y to Rs 5,514 crore. The earnings before interest, tax, depreciation and amortisation (Ebitda) soared by 48.9 per cent Y-o-Y to Rs 1,308.8 crore, with margins improvement of 520bps at 23.7 per cent. The management said that the strong performance during the quarter was driven by new products, key geographies, and improvement in operating margin and profitability.

Analysts at Elara Capital have a ‘Buy’ rating on Lupin with a target price of Rs 2,392 per share, as the brokerage firm sees more potential upside despite recent run-up.

“We believe gSpiriva is stabilising at USD 40mn per quarter. gMyrbetriq, launched in the quarter, also added to the momentum. Incremental competition in gPro-Air is a potential drag, but we see incremental revenue and profit from new launches overwhelmingly dwarfing the potential losses there,” analysts said.

The US business grew 30 per cent in FY24 in USD terms. The brokerage firm expects it to grow 22 per cent in FY25E and by 15 per cent in FY26E. Thus, growth momentum in the business will likely remain strong for the next 6-7 quarters. Given the limited competition nature of launches, it would have a positive impact on margin as well, it added. During the last fiscal year, the US market contributed to 34 per cent of the overall company sales.

Analysts at InCred Equities believe the US market momentum should largely continue with multiple good product launches in FY25F (Mirabegron, Peg-GCF, CGT launch of gPred Forte with 180-day marketing exclusivity and Glucagon) and FY26F (Tolvaptan, gRisperdal Consta, gSaxenda and gEdarbi – sole marketing exclusivity) with upside potential from products contingent on favourable litigation outcomes. Lupin expects its US business to grow in high single digits in FY25F, the brokerage firm said in the result update with ‘Buy’ rating on stock and target price of Rs 2,329.