Shares of Lupin surged and hit a fresh 52-week high; here’s why

Lupin Limited, a pharmaceutical company headquartered in Mumbai, India has announced its plans to enter into a strategic business transfer agreement with its wholly-owned subsidiary, Lupin Manufacturing Solutions Limited (LMSL). This decision was approved by the company’s Board of Directors during their meeting held on September 11, 2023.

After the news today shares of company has surged and hit fresh 52 week high at Rs 1174.25 and it has 52 week low of Rs 623.20. Today the script was opened at Rs 1135 and currently it is trading at Rs 1141.25, up by 1.18%.

Lupin Limited plans to carve out two Active Pharmaceutical Ingredients (API) manufacturing sites located in Dabhasa and Visakhapatnam, along with select research and development (R&D) operations, including fermentation, at Lupin Research Park in Pune. These assets will be transferred to LMSL.

FY23 revenues of the undertaking were about Rs 343.93 crore (including captive sales of Rs 231.78 crore). The net external sales represented 1% of the reported turnover of the company on a standalone basis, as on that date. Net-worth of the undertaking as on March 31, 2023 was Rs 611.52 crore.

Lupin Limited anticipates receiving a consideration in the range of Rs 750 crore to Rs 850 crore for this transaction. LMSL, the buyer, a newly established subsidiary, will focus on API manufacturing, sale, export, import, intermediates, fermentation, and contract development and manufacturing operations (CDMO).

While Lupin Limited expects to receive cash consideration, the shareholding pattern of the company will remain unchanged. The Business Transfer Agreement (BTA) between Lupin Limited and LMSL is set to be formally executed in October 2023.

Lupin is recognised as one of the world’s largest manufacturers of Tuberculosis drugs. The company have significant market share across multiple therapy areas such as Cardiovascular, Diabetology, Asthma, Paediatric, Central Nervous System, Gastro Intestinal, Anti-Infective and Non-Steroidal Anti-Inflammatory Drugs. Company has market capitalization of around Rs 51,950 crore. Over the past six months shares of the company have given staggering return of 74.70%.

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.