Buy Lupin, target price Rs 1130: Motilal Oswal

Motilal Oswal has given a buy rating to Lupin with a target price of Rs 1130. The share price moved down by 0.34 per cent from its previous close of Rs 971.85. The stock’s last traded price is Rs 968.55.

Lupin Ltd., incorporated in the year 1983, is a Large Cap company (having a market cap of Rs 44047.24 Crore) operating in Pharmaceuticals sector.

For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 3527.86 Crore, down 6.94 % from last quarter Sales of Rs 3791.00 Crore and down 19.01 % from last year same quarter Sales of Rs 4355.83 Crore. The Company reported net profit after tax of Rs 108.14 Crore in latest quarter.


Investment Rationale
The brokerage expects a 38% earnings CAGR over FY20-22E, led by: (a) niche launches (g-Albuterol – to be launched in Sep’20; Biosimilar-Enbrel/gFostair in the EU), (b) improving market share for Levothryoxin, (c) better-thanindustry growth in DF, and (d) partly the low base of FY20 (21% compounded decline in earnings over FY18-20). It expects RoE to improve to 12.7% by FY22E from 7% in FY20. The brokerage values LPC at 25x 12M forward earnings to arrive at target price of INR 1,130.

Promoter/FII Holdings
Promoters held 46.9 per cent stake in the company as of June 30, 2020, while FIIs held 21.3 per cent, DIIs 18.9 per cent and public and others 12.9 per cent.