Lupin dips 4%, hits seven-week low; what's making the Street nervous?

Lupin share price movement

 

Lupin's share price hit a seven-week low of ₹2,273.90, falling 4 per cent on the BSE in Monday’s intra-day trade. In the past two trading days, the pharmaceutical stock declined 5 per cent. In comparison, at 11:26 AM, the BSE Sensex was up 0.15 per cent and the BSE Healthcare index was up 0.07 per cent.

 

Meanwhile, in the past month, Lupin underperformed the market by falling 9 per cent, as against a 1.4 per cent gain in the BSE Sensex and a 2.6 per cent rally in the BSE Healthcare index. In the past three months, Lupin's market price gained 3 per cent, compared to a 20 per cent surge in the Healthcare index. 

 

 

Why has Lupin's share price declined 5% in 2 days?

 

Lupin reported a 16 per cent year-on-year (YoY) jump in consolidated profit after tax (PAT) at ₹1,417 crore in the first quarter ended June 30, 2026 (Q1FY27), riding on robust growth across its key markets. 

 

Consolidated sales rose 33.3 per cent YoY to ₹8,217 crore as against ₹6,134 crore in the year-ago period, the company said. North America sales grew 43 per cent YoY to $366 million led by Tolvaptan, while India sales rose 14 per cent YoY driven by cardiometabolic therapies.

 

The management indicated Tolvaptan competition will increase from Q2, with Apotex and Teva entering the market and a potential fourth entrant by September 2026, resulting in pricing pressure and market share redistribution.

 

Going forward, US growth momentum is expected to moderate as Lupin faces competition in two key products with management guiding for US annual sales of $1.1 billion in FY27, analysts at JM Financial Institutional Equities said in the Q1 results update, and accordingly, they revised estimates for the next two years.

 

While Lupin has a strong US launch pipeline, analysts believe new launches would largely help maintain the current level of US sales, albeit at lower profitability. Consequently, overall reported earnings growth is likely to remain flat-to-negative over the next two years, analysts said.

 

The stock is currently trading at 27x/21x FY28E/FY29E EPS and 36x/29x on core FY28E/FY29E EPS, which is expensive given the outlook for flat earnings growth and Lupin’s concentrated product portfolio. “We continue to value Lupin at 24x core EPS, rolled forward to Jun’28, and include an option value of ₹151, yielding a target price of ₹1,806 (earlier ₹1,992),” the brokerage firm said.   

 

Lupin’s margins will drop in subsequent quarters as competition will lead to erosion in its high value assets in the US, according to analysts at Systematix Institutional Research. 

 

In the US, management expects FY27 sales of $1.1–1.2 billion and quarterly sales of $250–280 million going forward (vs $366 million in Q1FY27) as incremental competition in Tolvaptan and Mirabegron weighs on near-term performance. The brokerage firm said it revised estimates to incorporate the Q1 performance, while remaining cautious on the near-term US trajectory and margin moderation. 

 

Analysts maintained a 'Hold' rating on Lupin with a target price of ₹2,284 based on 25x FY28E EPS. They remain constructive on the medium-term outlook as the upcoming complex-generic, injectable, inhalation, biosimilar and 505(b)(2) launches should support a recovery in US growth from FY28. Analysts expect Lupin to deliver Revenue/EBTIDA/PAT growth of 5 per cent/-6 per cent/-15 per cent respectively over FY26-28E.

 

Motilal Oswal Financial Services (MOFSL) lowered its earnings estimate by 6 per cent for FY27 to factor in increased depreciation and a higher tax rate. The brokerage firm said it values Lupin at 22x 12-month forward earnings to arrive at a target price of ₹2,500.

 

FY27 would be the year of consolidation after three years of strong earnings growth. Lupin is implementing efforts to build a niche product pipeline in focus markets to improve the growth outlook going forward. This, supported with marketing efforts in select markets, is expected to strengthen overall growth for the company, MOFSL said in the Q1 result update.

 

Having said this, earnings are expected to remain stable over FY26-28 due to increased competition in certain products in the near term and some gestation period to offset this impact, and subsequently return to growth path. The valuation provides limited upside from the current levels, analysts said while maintaining a 'Neutral' rating on the stock.    Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.