This Brokerage Has A “Buy” Call On Lupin

Broking firm, Motilal Oswal has placed a "buy" call on the stock of pharma major Lupin Ltd. The broking firm has set an upside target of 15 per cent from current levels on the stock.

"Lupin's (LPC) 1QFY21 PAT was the lowest over the past four years. The significant cost savings benefit was offset by the sharp decline in US sales and higher employee cost. However, based on niche launches like g-albuterol sulfate in the US, biosimilar Enbrel in the EU and gradually improving outlook for domestic formulation (DF), we expect better earnings prospects going forward.

"We have cut our Earnings Per Share estimate by 11.9%/10.5% for FY21/FY22E to factor in the COVID led impact on DF/ROW and gradual re-building of metformin sales (post recall). We value Lupin at 24 times (40% discount to its 3-year average) 12 month forward earnings to arrive at a price target of Rs 1,015. We remain positive on LPC due to (a) limited competition product approvals, (b) increase in market share in existing products, and (c) completion of remediation measures at sites under regulatory issues over the near term. Maintain Buy," Motilal Oswal Institutional Equities has said in a report.

The stock of Lupin Ltd last closed at Rs 953.10 on the National Stock Exchange.