 "Lupin market capitalisation nears Rs 1-trillion mark; shares rise 2%")
Lupin share price hit a new high of Rs 2,156.75, up 2 per cent on the BSE in Tuesday's intraday trade. The stock surpassed its previous high of Rs 2,130.85, touched on August 13. Thus far in calendar year 2024, Lupin share price has outperformed the market by surging 63 per cent as compared to 13 per cent rise in the BSE Sensex.
Lupin is set to become the seventh pharmaceutical company to achieve Rs 1-trillion market capitalisation feat. The company's market capitalisation hit a high of Rs 98,351 crore in the intraday today, and is less than 2 per cent away from the Rs 1-trillion milestone.
Currently, Sun Pharma (Rs 4.3 trillion), Cipla (Rs 1.30 trillion), Divi's Laboratories (Rs 1.30 trillion), Dr Reddy's Laboratories (Rs 1.16 trillion), Torrent Pharmaceuticals (Rs 1.13 trillion), and Zydus Lifesciences (Rs 1.12 trillion) from the pharma sector have market capitalisation over Rs 1 trillion, BSE data shows.
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, anti-infective, gastrointestinal, central nervous system and women's health.
Going ahead, Lupin said the company's India business continues to move forward and sharpen its focus on chronic and high-growth therapy areas, leveraging its strong market position and expanding its portfolio of high-quality, affordable drugs.
"As of March 2024, Lupin is the third-largest pharmaceutical company in the US by filled prescriptions, with a 5.2 per cent market share in generic scripts. With over 100 products in the pipeline across a wide range of therapeutic areas and dosage forms, we continue to maintain our business momentum, auguring well for the healthcare ecosystem in the US," Lupin said in its FY24 annual report.
Meanwhile, Lupin's US business has grown by a robust 33.8 per cent year-on-year (Y-o-Y), driven by gSpiriva which had helped the company post a turnaround in the overall growth and margins in FY24.
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Lupin has a significant dependence on gSpiriva (expect sales/Ebitda contribution of 4 per cent/17 per cent, respectively). "While the competition in this product may not be imminent in the near term, potential price cuts by innovators and limited scope for market share improvement (30- 35 per cent) may limit further upside from this product in FY25-26E," analysts at ICICI Securities said.
On its part, windfall from gSpiriva has helped the company pare off debt. In FY24, it reduced its gross debt by nearly 36 per cent to Rs 2,770 crore (net debt of Rs 660 crore). Thus, ICICI Securities expects Lupin to generate operating cash flow (OCF) of around Rs 6,800 crore which may be deployed to pursue M&A to improve presence in India and the US markets.
For FY25, management aims to grow its revenue by 10 per cent Y-o-Y with flattish gross margins (66.8 per cent in FY24) and Ebitda margins of over 20 per cent. Launches and cost curtailments may aid a further expansion in margins in the near term, the brokerage firm said.
ICICI Securities has raised EPS estimates by 5-12 per cent for FY25-26E, factoring in better sales from potential launches.
"The US business grew 30 per cent in FY24 in US dollar terms. We expect 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,” analysts at Elara Capital said in the Q1FY25 result update, with a ‘buy’ rating on stock and target price of Rs 2,392 per share.