Lupin Q3 PAT down 12 per cent, India operations improve: stock zooms 10 per cent

Mumbai based generic and branded drugs company Lupin posted its Q3FY16 results on Friday. Company's third quarter results beat street expectations with sales increasing 11.90 per cent on a yearly basis led by strong performance seen by its India and Japanese operations. Profits declined 11.92 per cent to Rs 529.75 crore owing to a flat growth in US markets.

Lupin’s consolidated net sales revenue increased by 11.90 per cent in Q3FY16 to Rs 3555.8 crore compared to Rs 3177.6 crore in the same period of the previous fiscal. Increase in revenue for the quarter was primarily driven by Indian and Japanese operations, whereas US sales growth remained flat.

Operationally the performance for the quarter in review saw a flat growth with a negative bias as EBITDA saw a de-growth of 0.65 per cent Y-O-Y to Rs 877.15 crore as against Rs 882.91 crore achieved in the same period of the previous fiscal. Operational profits saw a flat growth owing to increase in cost. Employee cost as a percentage to total revenue for the third quarter increased by 177 basis points to 14.86 per cent. Other expenses for Q3 also saw an increase of 197 basis points owing to cost incurred on sales promotion and other expenses on drug launch.

Profits for the quarter decreased by11.90 per cent to Rs 529.75 crore compared to Rs 601.45 crore in the same period of last fiscal. Other income saw a dip of 21.68 per cent on a Y-O-Y basis, whereas tax expense for the quarter increased by 21.89 per cent Y-O-Y.

Results on a sequential basis looked promising as sales grew by 7 per cent. EBITDA increased by 30.50 per cent Q-O-Q (quarter on quarter) and PAT saw a rise of 29.57 per cent.

Lupin’s expenditure on Research and Development (R&D) as a percentage of total sales increased to 11.7 per cent, which is an important barometer for judging a pharma company in terms of their drug pipeline. R&D increased to Rs 391.63 crore up from Rs 260.49 crore in the corresponding quarter of the previous fiscal, representing a growth of 50 per cent on a Y-O-Y basis.

Foreign markets continue to contribute more than 72 per cent of total revenues i.e. Rs 2576.81 crore, whereas domestic revenue share remained at over 27 per cent for Q3FY16.

Geography wise business performance saw a muted growth in the all-important US markets where sales increased 1.8 per cent Y-O-Y and 21.4 per cent sequentially. Japanese business rose by 9.2 per cent Y-O-Y and 15.6 per cent Q-O-Q. Indian operations for the quarter in consideration surged by 17.1 per cent Y-O-Y and saw a marginal decline of 0.3 per cent successively.

In the US markets, the company received 9 approvals in the US and launched 4 new products during the quarter. Lupin filed 5 ANDAs (Abbreviated New Drug Applications) and received 9 approvals from the US FDA during the quarter. Cumulative ANDA filings with the US FDA stood at 225, as on December 31st, 2015 with the company having received 133 approvals to date. The Company has 37 First-to-Files (FTF) products which includes 17 exclusive FTF opportunities.

Reacting to the Q3 results stock swelled almost 10 per cent in trade on Friday.