Lupin Q4 Review – Worst-Ever Margins: ICICI Securities

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Lupin Ltd.’s Q4 FY22 performance was disappointing with the company reporting its lowest ever Ebitda margin of 6.9% (our estimate: 11.5%) due to steep price erosion in the U.S., product recalls and elevated raw materials and freight costs.

Revenue grew 2.6% YoY to Rs 38.8 billion (our estimate: Rs 39.2 billion).

Adjusting for Rs 1.3 billion impairment charges for Gavis IPs, net loss stood at Rs 680 million (our estimate: Rs 1.7 billion).

U.S. revenue declined 10.4% QoQ to $181 million (our estimate: $206 million). U.S. growth is highly dependent on key launches and plant clearance by the U.S. Food and Drug Administration post re-inspection.

Steep price erosion in the U.S. in near term doesn’t provide room for error.

We believe Lupin’s growth outlook remains uncertain and Ebitda margin would remain subdued going ahead.

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