Shares of Lupin has fallen by 5% despite a Rise in Net Profit

Lupin Ltd. is an Indian Multinational pharmaceutical company based in Mumbai, It is one of the largest generic pharmaceutical companies in terms of revenue. It has a presence across research, manufacturing and marketing of formulations and APIs. The key focus areas for the company include paediatrics, cardiovascular,anti-infectives, asthma, diabetology and anti-tuberculosis. The company recently reported its Q4 earnings with a YoY rise of 52% in net profits.

The stock has fallen even after rising net profits

The stock of Lupin has fallen by 5% even after rising in net profits as the net profit reported was below the street expectations, The net profit was reported at Rs.359.45 crores which was below street expectations of Rs.498.9 crores, Though there was a rise of 52% in this bottom line from Q4 FY 2022-23. Higher raw material costs have been a key factor in dragging Lupin’s Q4 FY 2023-24 net profit below the estimates of the market. The stock is trading 5% lower from its previous day’s closing price, currently trades at Rs.1595 a piece and has given returns of more than  117% in the past year.

Managing Director after results

Nilesh Gupta, Managing Director of Lupin Ltd. said that,” We continue to move forward with sustainable and profitable growth and delivered another strong set of numbers in Q4. Our U.S. sales remain healthy driven by inhalation products, and our India formulation business is delivering ahead of the market”, He further added that this year had been a strong year for the company and they are looking to have an even stronger year ahead with consistent improvement in margins.

Q4 FY 2023-24 Results

The company reported a net profit of Rs.359.45 crores for Q4 FY 2023-24 an increase of 52% from Rs.235.96 crores in Q4 FY 2022-23. The revenue was reported at Rs.4895.11 crores from Rs.4330 crores, an increment of 13%. The Company’s EBITDA came in at Rs.1026.1 crores up by 66% from Rs.615 crore in Q4 FY 2022-23, The EBITDA margins stood at 14.2% against 11.5% in Q4 FY 2022-23.

Conclusion: Lupin has reported decent returns for the quarter as compared to Q4 FY 2022-23 but market expectations for this quarter were higher than what is reported, which has led to a fall of 5% in the stock today. While sharp rise in margins should also be considered and the management outlook for the upcoming quarters is also looking strong. The stock currently trades at Rs.1595 a piece.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.