Buy Lupin; target of Rs 1001: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Lupin

1QFY21 revenue and PAT was impacted due to decline of US biz (26% QoQ CC), India formulations (2% YoY) and higher effective tax rate of 60% v/s 25% QoQ. Sequential decline in US (Gx) was led by Metformin (extended release) recall, seasonality effect and normalization of sales as 4QFY20 had stocking benefits. While India formulations were impacted due to lockdown, we continue to remain positive on LPC and believe 1QFY21 was one-off performance due to COVID.

Outlook

We maintain BUY rating and TP of Rs1,001 based on 24x PE of FY22E and believe that LPC 1) would receive resolution on manufacturing issues (USFDA) beginning with Somerset followed by Goa and Pithampur (Unit-2) in FY21E, 2) India formulations may return to normalized growth level of 10-12% 3) Albuterol to be approved soon 4) ramp up of Levothyroxyn and 5) launch of Etanercept in EU.

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