Lupin shares trade flat ahead of Q3 result; here’s what to expect

The EBIDTA margin is likely to improve sequentially on the back of a marginal recovery in US sales and sustained cost-cutting measures

Shares of Lupin erased early gains to trade flat on January 9 as investors bet in anticipation of the drugmaker’s December quarter results due later in the day.

The shares moved higher in early trade after the company said it got the US Food and Drug Administration’s nod to market Glycopyrrolate injection.

Glycopyrrolate is used in the treatment of ulcers in adults and children and has an estimated annual sales of $39 million in the US.

At 2.48 pm, Lupin was trading 0.10 percent lower at Rs 774.50 on the National Stock Exchange.

Q3 expectations

The Mumbai-based company’s operating margin is likely to witness a sequential improvement on the back of some recovery in the US market and cost cutting measures, brokerage firm ICICI Securities said in a report.

A poll of analysts by Moneycontrol pegged the company’s EBIDTA margin at 13.4 percent in the October-December period, up 207 basis points (bps) from the previous quarter. However, year-on-year basis, the margin is likely to contract 101 bps. One basis point is one-hundredth of a percent.

“Some recovery in US sales on the back of new product launches including Suprep and acquired respiratory brands such as Xopenex HFA and gBrovana are expected to partially offset weakness in India market due to loss of selling rights for Cadmus,” brokerage firm ShareKhan by BNP Paribas said in its report.

On that account, sales are expected to rise marginally to Rs 4,240 crore from Rs 4,161 crore in the year-ago quarter. In the previous quarter, net sales were at Rs 4,145.5 crore.

Despite marginal improvement in sales, weak operational performance on a yearly basis is likely to drag the drugmaker’s bottomline by 71.5 percent to Rs 211 crore. Sequentially however, the bottomline is seen rising 62.5 percent.

A tax write-back of Rs 382 crore is also expected to offer some comfort to the bottomline.

Investors will also focus on the management’s commentary on growth outlook in major markets like the US and the drug pipeline.

Leave a Reply

Your email address will not be published. Required fields are marked *