Fundamental Analysis of Lupine – Industry Analysis and Finance

Lupin’s Fundamental Analysis: A medicine is a substance that can be used to prevent, treat, or cure a disease. Indian pharmaceutical companies have made great strides in supplying medicines and are improving their products through more research. In this article, we will look at the basic analysis of Lupine Limited, a pharmaceutical company.

Lupin’s Fundamental Analysis

Desh Bandhu Gupta founded Lupine in 1968 with Rs. 5 thousand borrowed from his wife. He established Lupine’s first manufacturing plant and expanded his business by supplying iron and folic acid tablets to the Indian government’s major program to improve maternal and child health. The company’s headquarters were in Mumbai.

The company’s position in the US prescription market is 3rd with over 911 active patents and 6th in the Indian pharmaceutical market with 463 Abbreviated New Drug Applications (ANDAs), or potential approvals of generic drugs by the US FDA.

segment analysis

The company’s revenue was Rs. 16,269.98 crore in FY23. Revenues are primarily derived from pharmaceutical sales (99.65%), service revenue (0.15%), and the remaining 0.20% from research service revenue and intellectual property (IP) sales.

India generates 39.55% of the revenue, the US generates 31.70% and the rest of the world generates 28.74%.

industry analysis

Soon, the Indian pharmaceutical industry is expected to develop at a CAGR of 22.4%, and the medical devices market is expected to grow by USD 25 billion by 2025. India is the world’s second largest contributor to the biotechnology and pharmaceutical industries. In India, prices are regulated so pharmaceutical companies can control the prices of drugs and make them affordable.

The Indian pharmaceutical market is expected to reach $130 billion by 2030. Meanwhile, the global pharmaceutical market is expected to exceed $1 trillion by 2023.

India is the world’s second largest contributor to the biotechnology and pharmaceutical industries.

According to government estimates, the Indian pharmaceutical industry is worth about $50 billion, of which exports account for more than $25 billion. India accounts for approximately 20% of global generic drug exports.

Lupine – Finance

Sales and Net Profit

The company reported revenue for FY23 at Rs. 16,641.66 crore compared to Rs. 16,405.48 crore in FY22. The 4-year CAGR was 3.21%. Sales increased by 1.43% year-on-year and have remained stable over the past four years.

Net profit in 2023 was 130 million won. 447.69 crore compared to a loss of Rs. -1,509.72 crore in FY22. The CAGR was -3.57%. The loss in FY22 was due to patent litigation costs, which were settled at Rs. 1,878.38 crore and was recorded as business compensation expense. Excluding this, the profit is 10 million won. It is 50.58 billion won, a decrease from the previous year.

profit

The company’s OPM in FY23 increased to 10.33% from 1.31% in FY22. The increase in OPM was due to strengthened cost management, averaging 12.26% over the past five years.

NPM in FY23 stood at 3% compared to -9% in FY22. The decline in FY22 was due to one-off litigation costs, which slowed the growth. Flat topline growth suppressed profits. The average for five years was 0.61%.

rate of return

The company’s RoE in FY23 was 3%, up from -12% in FY22, with a five-year average of 0.25%. RoE is consistent with FY22 growth rates, excluding one-time costs.

RoCE in FY23 was 8% compared to -9% in FY22. The five-year average was 4.42%. However, RoCE surpasses RoE, indicating better utilization of funds.

debt analysis

The debt ratio increased from 0.32 to 0.34 in 2022. Debt may be manageable, but interest expenses will reduce profits, and debt reduction may allow the company to make acquisition decisions.

Interest coverage ratio increased from 0.20x in FY22 to 3.82x in FY23. The average for 5 years was 5.13 times. This ratio indicates that interest expenses are fully covered, but interest expenses are impacting the ratio due to low profits.

Lupine Fundamental Analysis – Key Indicators

List of Key Indicators for Lupine Ltd.

Lupine’s future plans

• In FY24, we plan to launch niche products such as gSpiriva (Tiotropium) and gDarunavir in the US and gFostairin in Europe.
• With its product portfolio, the company hopes to increase its presence and market share in Latin America.
• Spiriva, Diazepam gel, and Nascoval nasal spray are expected to drive profitable growth in the US market.
• With the U.S. being the world’s largest pharmaceutical market, the company is looking to increase R&D on certain products that are experiencing margin pressure to improve their products and reduce valuation decline.

conclusion

As we get closer to the end, I will do a quick fundamental analysis of the Lupine company.

The company has the potential to grow in the pharmaceutical sector, but stagnant sales and global challenges are making it difficult to achieve top-line growth. Launching new products can help a company grow through diversification. The reason there is concern about the low net profit margin is because interest expenses account for a larger proportion of EBITDA. What do you think about the potential of this company? Let us know your thoughts in the comments section below.

Written by Santosh

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