Lupin rises on settling dispute with Gavis and Novel; gains 5% in four days

In the past one month, the stock has outperformed the market by gaining 11 per cent, as compared to a 6.6 per cent rise in the S&P BSE Sensex
Shares of Lupin were trading 2.5 per cent higher at Rs 985 on the BSE on Thursday after the pharmaceutical company settled a dispute with Gavis Pharma and Novel Laboratories. The stock was trading higher for the fourth straight day, up 5 per cent during the same period.

On Wednesday, Lupin announced in a BSE filing that its dispute with the sellers in the Gavis/Novel transaction has been resolved amicably to the satisfaction of all parties. READ HERE

In the past one month, the stock has outperformed the market by gaining 11 per cent, as compared to a 6.6-per cent rise in the S&P BSE Sensex. However, in the past three months, it has underperformed the indices by falling 5 per cent, as against a 20-per cent rally in the benchmark index. The stock hit a 52-week high of Rs 1,122 on September 18, 2020.

On November 25, Lupin has said it has launched generic immunosuppressant Tacrolimus capsules in the American market after its alliance partner Concord Biotech received approval for the product from the US health regulator.

Tacrolimus Capsules USP, 0.5 mg, 1 mg, and 5 mg, are the generic equivalent of Prograf Capsules, of Astellas Pharma US and are indicated for the prophylaxis of organ rejection, in adult patients receiving allogeneic kidney transplant, liver transplant, and heart transplant, and in pediatric patients receiving allogeneic liver transplants, in combination with other immunosuppressants.

According to IQVIA MAT September 2020 data, Tacrolimus capsules USP of 0.5 mg, 1 mg, and 5 mg had an annual sales of around $303 million in the US, the company said.

Meanwhile, Lupin has also provided an upbeat guidance with a 10 per-cent year-on-year (YoY) revenue growth for the October-March period (H2FY21). EBITDA (earnings before interest, taxes, depreciation, and amortization) margin are expected to increase to 18.5 per cent in Q4 and further to 20-22 per cent in the medium term. Effective tax rate (ETR) would likely go down sharply in H2FY21 with FY21 ETR expected to be in mid-thirties.

Analysts at Emkay Global Financial Service believe that the ramp-up of Albuterol, Glumetza, L-thyroxine and uptick in Tamiflu could lift gross margins significantly (by nearly 400bps) in H2FY21. However, a modest increase in staff cost and continued normalization of other expenses should partially offset the uptick in GM. Despite these, in our view, nearly 200 bps margin expansion is achievable in Q4 over Q2, the brokerage firm said in its September quarter results update.  

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