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Home / Markets / Mark To Market /  Margin improvement offsets weak sales for Lupin in March quarter

Expectations were running low from Lupin Ltd as far as its performance in Q4 went, particularly on the US business growth front. The weak flu season was likely to result in lower sales for flu treatment products such as Tamiflu. Besides, year-ago sales of these products represented a relatively high base.

US generic sales data for January and February had already given an indication of soft generic albuterol inhaler and levothyroxine sales, say analysts. Hence, it was not surprising that North American sales were down 5.3% year-on-year (y-o-y). The segment contributes 40% to overall sales. However, a 3.7% sequential growth in the business was a silver lining.

Domestic sales, which accounts for 34% of overall sales, grew 7.9% y-o-y. Nevertheless, the sequential sales decline of 5.6 % came as a disappointment. The company has been doing well with its chronic portfolio, while its acute segment sales remain volatile. Also, while peers have been benefiting from their covid treatment portfolio, Lupin hasn’t had gains from this segment.

Satish Kumar/Mint
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Satish Kumar/Mint


The highlight of the performance nevertheless has been the improvement in profit margins. Ebitda margins (including other income) during the quarter improved to 20.4% from 19.4% a year ago. Ebitda is earnings before interest, taxes, depreciation and amortization. Chief financial officer Ramesh Swaminathan said the company targets further margin improvement

While FY21 has been a challenging year, the company expects to see better earnings growth during FY22. The US will see about 15 product launches.

However, a ramp-up in the respiratory treatment albuterol and thyroid treatment drug levothyroxine will be watched for. The company will benefit from a full year of contributions from albuterol, launched at the end of H1FY21. Meanwhile, the company is also expected to launch two large products (generic -Etanercept and generic-Fostair) in Europe.

In the domestic market, the company is looking at opportunities in the covid treatment space and any meaningful development can help drive growth. The company, otherwise, has a strong chronic portfolio that is growing well. The acute segment sales are also doing much better compared to last year.

Though Lupin’s growth prospects remain decent, the Street will be watchful on sales traction going forward. Further, after strong growth posted by domestic pharma stocks, Lupin too has seen sharp gains of more than 13% in May and is currently trading at about 31 times FY22 earnings estimates.

A further pickup in growth momentum and earning upgrades will remain crucial for any further re-rating.

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