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Lupin releases Q4FY22 results

Basis the long-term outlook, the company's Board has recommended a dividend of 200 per cent

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Lupin reported its financial performance for the quarter and fiscal year ending 31st March, 2022. Basis the long-term outlook, the Board of Directors has recommended a dividend of 200 per cent, according to a company statement.

The statement said that the company’s gross profit was Rs 22,323 million compared to Rs 23,929 million in Q3 FY2022, with margin of 57.8 per cent. Personnel cost was 18.2 per cent of sales at Rs 7,032 million compared to Rs 7,438 million in Q3 FY2022. Manufacturing and other expenses were 34.2 per cent of sales at Rs 13,212 million compared to Rs 13,518 million in Q3 FY2022. Investment in R&D for the quarter was Rs 3,442 million (8.9 per cent of sales)

In addition, the operating working capital was Rs 60,303 million as on 31st March, 2022. Capital expenditure for the quarter was Rs 1,577 million and Rs 6,872 million for FY202. Net debt as on 31st March, 2022 stands at Rs 19,227 million and net debt-equity for the company as on 31st March, 2022 stands at 0.16.

As per ICICI Securities, Lupin’s Q4FY22 performance was disappointing with the company reporting its lowest ever EBITDA margin of 6.9 per cent due to steep price erosion in the US, product recalls and elevated raw materials and freight costs. Revenue grew 2.6 per cent YoY to Rs 38.8 billion. Adjusting for Rs 1.3 billion impairment charges for Gavis IPs, net loss stood at Rs 680 million. The US revenue declined 10.4 per cent QoQ to $181 million. The US growth is highly dependent on key launches and plant clearance by the US FDA post re-inspection. Steep price erosion in the US in near term doesn’t provide room for error. We believe growth outlook remains uncertain and EBITDA margin would remain subdued going ahead.

Further, the outlook, as per ICICI Securities analysts, suggests that while India would grow healthy, the US is expected to remain under pressure due to price erosion and product rationalisation. Goa plant’s EIR provides relief but the US FDA OAI/WL on three plants could deter growth in near term. Overall, we expect revenue/PAT CAGR of 4.9 per cent/12.4 per cent over FY22-FY24E. RoE and RoCE remain suppressed at 9.5 per cent and 7.6 per cent, respectively, for FY24E.

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