Net sales up 21%, PAT jumps 40%: Lupin’s Q1FY11 revenue grew by a healthy 20.9% y-o-y to Rs1312.1 cr, which was below our projection. The operating profit margin (OPM) expanded by 210 basis points to 20% due to a 910-basis-point dip in the raw material cost. The change in the product mix also helped in boosting the margins, as the company continued to focus on value-added formulation business
Maintain Buy: Lupin’s Q1FY2011 performance is encouraging with diverse drivers in place to sustain the growth momentum going forward. In FY2011, the product opportunities will be driven primarily by Antara, Allernaze and Lotrel. We believe, the growth beyond FY2011 will be driven by launches from an impressive portfolio of oral contraceptives ophthalmology and possibly oncology in the domestic market. We retain Lupin as one of our top picks. At the current market price of Rs1926, the stock trades at 20.4 times FY2011E fully diluted earnings and at 17.1 times FY2012E fully diluted earnings. We maintain our Buy recommendation on the stock with a price target of Rs2030
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