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Shares of Lupin continued to decline for the second consecutive day on Thursday after the company's earnings missed street's expectations due to a dip in US sales in the June quarter and lower gross margin. After plunging over 7% in Wednesday's session, Lupin's stock fell another 5% in today's early deals to 990 per share on the BSE.

Lupin reported a significant jump in its consolidated net profit at 542 crore for the quarter as against 106.9 crore in the corresponding period of the previous fiscal. The pharma company's revenue from operations stood at 4,237 crore from 3,468.63 crore in the year-ago quarter.

Though, US revenue dropped 11.8% sequentially to $172 million due to price erosion and competition in famotidine. Gross margin also dropped due to lower US sales despite strong India growth. Those at ICICI Securities believe that US sales would remain under pressure and multiple ongoing USFDA issues would weigh on new approvals. The near term outlook remains uncertain and it expects EBITDA margin to remain below 20% despite focus on cost control initiatives. The brokerage has a Reduce rating on the stock with a reduced target price of 962 per share.

Another brokerage Motilal Oswal has a Neutral rating on Lupin shares with 1,040 target price as it said that current valuations adequately factor in potential niche launches over the next 12–15 months. Motilal has lowered its earnings estimate by 22%/14% for FY22E/FY23E, factoring in increased competition in g-Famotidine and pricing pressure in the base business, failure to supply products due to supply disruption on account of COVID, the deferral of sales of certain products, and reduced operating leverage.

Analysts at Prabhudas Lilladher see a near term challenging period for Lupin and thus, have downgraded the recommendation to ‘Reduce’ with target price of 955 (earlier 1,314) from ‘Accumulate’ due to delay in resolution of two key plants (Goa and Indore unit-2) as more than 50% of pending ANDAs contributed by these plants.

Indian ace investor Rakesh Jhunjhunwala holds 1.60% stake or 72,45,605 shares in Lupin as of June quarter, BSE shareholding data showed.

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