23 Nov

On track to deliver 11th straight quarter of double-digit growth – Nestle India

Update on the Indian Equity Market:
On Friday, Nifty ended 0.7% higher at 12,859. The top gainers for Nifty 50 were Bajaj Finserv (+9.3%), Titan (+5.4%), and GAIL (+4.0%) while the losing stocks were Reliance (-3.7%), Adani Port (-1.6%), and IndusInd Bank (-1.5%). Top gaining sectors were Financial Service (+1.7%), IT (+1.4%), and FMCG (+1.2%) while top losing sectors are Media (-0.9%), and Pharma (-0.3%).

Edited excerpts of an interview with Mr Suresh Narayanan, CMD, Nestle India Ltd; dated 19th November 2020 from CNBCTV18:

The Company had a good 2Q with 10.2% growth in the top line. This will be the 11th straight quarter of double-digit growth.

The plant utilisation is well over 90% with some restrictions. Manufacturing levels are growing upwards.
For Nestle India, the core elements of their strategy which are 1) penetration linked volume growth and; 2) a strong focus on innovation and renovation remains constant for the upcoming quarters.

The total Distribution infrastructure has opened & continues to be a positive feature.

The Indian economy in recent times is following the theme of the resurgence of Bharat. The Tier 2, 3 & 4 towns and the rural market are doing extremely well.
Urban India is still facing some operating issues but is growing gradually. For Nestle India, it grew by 0.7% in 2Q while rural grew by 1.7%. In 3Q the Company saw urban growth of 6% & rural growth of 12%.

According to Mr Narayanan, the most unfortunate thing that happened during the pandemic was the meltdown of out of home consumption while an enormous surge is seen in at-home consumption. On a positive note, the out-of-home consumption is gradually opening up, and therefore, he sees some balancing in in-home & out-of-home consumption. Thus, the kind of absurd seen in the consumption in some of the categories will start to normalise.

As part of accessing rural India, the Company is taking 3 major steps: 1) improved access points of distribution. Stocking points have been increased to 12,000 from 8,000-9,000 2 years back, 2) carving out the portfolio making it more relevant for semi-urban & rural consumers, 3) Concentrating & establishing a better value & quality in brands as per the consumer’s needs.

The Company has recalibrated the innovation strategy during the pandemic. The Company has launched 60 new products in the last 2 years and 70% of these are successful.

Four big themes of innovation are coming up going forward: 1) better nutrition, 2) immunity-related innovation, 3) will be introducing ‘touchless’ vending for restaurants, and 4) identifying parts of the portfolio which need tweaking.

The Company may enhance nutrition & immunity brands in line with the theme and may also modify the price-value equation of some products.
The food processing PLI opportunity announced by the government is a huge and fantastic opportunity according to him.

Nestle India expects a CAPEX of Rs 2,600 crores to be completed over the next 3-4 years. Capex includes a new factory in Sanand, Gujarat. A substantial part of the CAPEX goes for the Sanand factory set up. The Company plans to invest in coffee, confectionery & dairy business. The higher capacity will have a huge multiplier effect for Nestle India.

Consensus Estimate: (Source: market screener website)
The closing price of Nestle India Ltd was ₹ 17,400/- as of 20-November-2020. It traded at 77x/ 65x/57x the consensus book value estimate of ₹ 225/267/307 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 16,855/- implies a PE multiple of 55x on FY23E EPS of ₹ 307/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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20 Nov

Footfalls improving every month– Phoenix Mills

Update on the Indian Equity Market:

On Thursday, Nifty closed 1.3% lower at 12,772. Within NIFTY50, POWERGRID (+2.6%), ITC (+2.2%), and NTPC (+1.7%) were the top gainers, while SBIN (-5.0%), ICICIBANK (-4.2%), and AXISBANK (-4.1%) were the top losing stocks. Among the sectoral indices, FMCG (+0.4%), and MEDIA (+0.3%) were the only gainerswhilePSU BANK (-3.1%), BANK (-2.9%), and PRIVATE BANK (-2.6%) were the toplosing sectors.

Footfalls improving every month– Phoenix Mills

Excerpts of an interview with Mr. Shishir Shrivastava, MD, Phoenix Mills, aired on CNBC-TV19 on 18thNovember 2020
● Average footfalls for October and November have reached 55%. Footfalls were higher in the first 2 weeks of November. Consumption, especially in the first 2 weeks of November has been 104% of last year. This means that conversion rates have gone up, i.e more people entering the mall are actually buying/consuming.
● 2QFY21 revenue was down 48% YoY as retail stores and hotels were not operational. But Phoenix Mills is seeing very good pick up now. Management expects FY21 to end at 58% of FY20’s rental income.
● Phoenix Mills has concluded negotiations with bank partners and have absolute visibility on how cash flows will pan out.
● Any discounts and waivers given by Phoenix Mills for the period of shutdown and the period after unlocking will end by the close of FY21. FY22 rentals will be close to what was recorded in FY20.
● When malls opened in August, footfalls were 25% which has increased to 55% now. So the trend is encouraging. People are being careful leading to still subdued footfalls. Phoenix Mills are also regulating the people density in their properties.
● Every month footfalls are improving 25-30%. Management hopes that they should be close to 75-80% of footfalls by 4QFY21. That being said, the important metric of consumption is tracking very well.
● All of Phoenix Mills’ expansion projects are well underway. They opened a new 1 mn sq ft. mall in Lucknow in July 2020 which is performing well. There are some delays on account of shortage of manpower but they are largely on track with expansion projects.
● Under construction projects of Phoenix Mills were funded by equity and there was no draw down of debt- which continues.
● Phoenix Mills have lease rental discounted debt on the operational assets. The moratorium has helped and now as cash flows are improving, management has visibility that they will be able to service all debt obligations by 3QFY21. This also includes amounts to be paid for deferment of moratorium.
● Phoenix Mills has around Rs 45,000 mn gross debt, and aroundRs 18,500mn cash on book. As free cash flow keeps improving, net debt levels can come down further.

Consensus Estimate (Source: market screener website)
● The closing price of PHOENIXLTD was ₹ 645/- as of 19-November-2020. It traded at 215x/ 33 x/ 25x the consensus EPS estimate of ₹ 3.0/19.8/26.2 for FY21E/ FY22E/ FY23E respectively.
● The consensus target price of ₹ 732/- implies a PE multiple of 28x on FY23E EPS of ₹26.2/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Diversified, Phoenix Mills, Uncategorized 0 Comments Read more...
19 Nov

OMC’s have asked for an increase in trade margins- Mahanagar Gas

Update on the Indian Equity Market:
On Wednesday Nifty closed 0.5% higher at 12,860. Among the sectoral indices, PSU Banks (+3.6%), Auto (+3.1%), and Realty (+2.1%) closed higher. FMCG (-1.1%), IT (-0.8%), and Pharma (-0.7%) closed lower. BPCL (-2.9%), HUL (-2.0%), and Dr Reddy (-1.7%) closed on a negative note. M&M (+10.4%), Tata Motors (+9.5%), and Bajaj Finserv (+6.5%) were among the top gainers.

Excerpts from an interview of Mr. Deepak Sawant, Deputy MD, Mahanagar Gas with CNBC-TV18 dated 17th November 2020:

● Margins have increased led by a drop in the purchase prices of gas. Domestic gas is around 75-80% of total sales.
● There is an improvement seen in the maintenance cost and other expenditures.
● On volumes and execution, he said the volume was 2.1 mmscmd in Q2FY21.
● In Q3 and Q4 the company will cross 3 mmscmd but on an overall FY21 basis we will be at ~2.5 mmscmd.
● Oil marketing companies have asked for a hike in dealer commission. The OMC’s have asked for double of earlier trade margins. The company has created a contingent liability every year as per the formula.
● The capex plan for FY21E is around Rs 550cr. The company is planning 1.5 times of FY21E capex in FY22 because of future opportunities.
● The volume growth in Q3 & Q4 will be 10% higher YoY.
● The company has reached 100% of the previous year’s volumes and CNG volumes still at 90% as of the date of the interview, so volume growth has come from other sectors.
● In the last 6 months, there were around 40,000 vehicles converted in the city of Mumbai to CNG which amounts to 10% of CNG volumes.

Consensus Estimate: (Source: market screener and Investing.com websites)
● The closing price of Mahanagar Gas was ₹ 906 as of 18-November-2020. It traded at 15x/ 12x/ 11x the consensus Earnings per share estimate of ₹ 59.4/78.6/84.8 for FY21E/ FY22E/ FY23E respectively.
● e consensus average target price for Mahanagar Gas is ₹ 1,119/- which implies a PE multiple of 13x on FY23E EPS of 84.8/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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18 Nov

Looking to enter the refrigerator segment: Dixon Technologies

Update on the Indian Equity market:
Markets started the four-day week on a positive note, led by global peers on the back of positive vaccine news from Moderna. Nifty closed the day 94 points higher at a new record high of 12,933. Within the index, the gainers were led by TATAMOTORS (6.2%), TATASTEEL (5.9%) and HDFCLIFE (5.7%) whereas BPCL (-4.2%), HEROMOTO (-2.6%) and NTPC (-2.5%) were the laggards. Among the sectoral indices, METAL (2.4%), PSU BANK (2.2%), and BANK (2.1%) led the index higher while MEDIA (-1.3%), PHARMA (-0.7%), and IT (-0.3%) were the laggards.
Excerpts of an interview with Mr. Atul Lall, Managing Director, Dixon Technologies Ltd (Dixon) published on CNBC-TV18 dated 13th November 2020:
The government on Wednesday levied a 5% duty on the import of TV parts like chips, printed circuit board assemblies, and glass boards. Reacting to the development, Mr. Lall said that the industry has been requesting the government to correct the disparity for a very long time.
After the recent decision by the government, the duty on both pure and open cell is at 5%. The localization on LED and LCD TV parts too is positive for coming quarters.
He said that the government has stated that LED will be covered under the production-linked incentive (PLI) scheme. The final details about it are still to be announced. If this development takes place then it gives an additional impetus for exports of LED lighting products to the company.
The company has expanded the capacity of LED TVs from 3.6mn to 4.4mn in phase-I. The company further plans to expand the capacity to 5.5mn sets (>30% of India’s requirement). The expansion will be completed by March 2021.
The company entered into digital setup boxes in a big way. In the next phase, the company is looking to enter the refrigerator segment organically or inorganically.
The company achieved the highest monthly production of 3.6 lakh units and the order book for 4Q looks healthy as well.
Consensus Estimate: (Source: market screener website)
The closing price of Dixon was ₹ 10,302/- as of 17-Nov-2020. It traded at 81x/ 47x/ 33x the consensus EPS estimate of ₹ 127/ 219/ 316 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 9,940/- implies a P/E multiple of 31x on FY23E EPS of ₹ 316.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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17 Nov

Not keen on diversifying at this point – M&M

Update on the Indian Equity market:
On Friday, Nifty50 ended 0.2% higher at 12,720. EICHERMOT (+7.4%), BAJAJFINSV (+3.7%), and COALINDIA (+3.1%) led the index gainers while TATAMOTORS (-3.3%), LT (-2.0%), and HDFC (-1.1%) led the laggards. Among the sectoral gainers, METAL (+1.7%), REALTY (+1.3%), and PHARMA (+1.1%) were the leaders while MEDIA (-0.9%), and FMCG (-0.1%) were the only index losers.

Excerpts of an interview of Mr. Anish Shah, MD & CEO-designate, M&M published in Business Standard on 12th November 2020:
• The stock price has more than doubled since March. The board’s decision to not invest in SsangYong was important and signaled to investors that the management is serious about capital allocation.
• The next re-rating will happen once the international subsidiaries turn around and start contributing to earnings. The second set of actions is toward driving the growth of the domestic business. Third, they have identified significant growth drivers for the future, which are termed ’10 gems’.
• They are conducting a detailed analysis of growth drivers of international subsidiaries’ performance; does it have the potential for an 18 percent return on equity? They are working to see if they can revisit their go-to-market, product, and channel strategies. The subsidiaries will have to show a profitable path.
• M&M was the best performing stock in the Nifty for 17 years. Though acquisitions were made even then, that was driven by a very high level of fiscal discipline. Now, the acquisitions will be made, just that the bar in terms of fiscal discipline will be as high as it was in the past.
• They don’t expect to diversify even when they make an acquisition. There are 10 businesses right now and they believe there is a lot of potential to grow. They are keen on scaling up the diversified footprint.
• The joint venture with Ford has been delayed because of the pandemic and government approvals.
• There is a lot of synergy from material costs in the auto and farm equipment segments. They announced the best-operating margins and that is why those segments will be together.

Consensus Estimate: (Source: market screener website)
• The closing price of M&M was ₹ 629/- as of 13-November-2020. It traded at 23x/ 17x/ 15x the consensus earnings estimate of ₹ 26.9/ 36.7/ 41.1 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 667 implies a PE multiple of 16x on FY23E EPS of ₹ 41.1/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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13 Nov

Collections have recovered to 80% of pre-COVID levels – INDIAMART

Update on the Indian Equity Market:
On Thursday, NIFTY closed in red at 12,690 (-0.5%). Top gainers in NIFTY50 were HUL (+3.3%), Grasim (+2.9%), and Shree cement (+2.4%). The top losers were SBI (-3.0%), Kotak Bank (-2.8%), and Coal India (-2.7%). The top sectoral gainers were FMCG (+1.3%), REALTY (+0.7%) and MEDIA (+0.6%) and sectoral losers were PSU BANK (-2.3%), BANK (-1.9%), and PVT BANK (-1.8%).

Excerpts of an interview with Mr. Dinesh Agarwal, Founder & CEO – IndiaMART InterMESH Ltd with CNBC dated 12th November 2020:
• IndiaMART’s second-quarter revenue growth is largely similar to the last quarter but margin improvement continues.
• In the months of May to August, they had been seen a week-on-week growth and that has resulted in almost 80 percent of pre-COVID levels in terms of sales and collections both.
• Though they have recovered significantly from the last quarter, the revenue and collection are still slightly below the last year same quarter numbers.
• The markets have opened up, the economy has opened up, but there is a risk of the third wave, so they are looking at it cautiously.
• They have yet not opened any offices and their staff is not able to visit any customers. So post Diwali if they are able to reach out to the market in full swing and that will derive the growth from here on.
• Currently they are following their own plan, so they are neither looking at raising any capital nor looking to sell any stake.
• Their cost base has been running at about Rs 1,200 mn per quarter, in lockdown lot of cost-cutting was planned and done during the quarter and that has resulted in the significant cost going down to almost Rs 800 mn per quarter.
• As the business will open up, as offices will open up half of that cost should come back and some of the cost advantages that they have taken can be permanent.

Consensus Estimate: (Source: market screener and investing.com websites)
● The closing price of INDIAMART Ltd was ₹ 4,940/- as of 12th November 2020. It traded at 51x/ 53x/46x the consensus earnings estimate of ₹ 96.3/94.2/108/ for FY21E/22E/23E respectively.
● The consensus price target of INDIAMART Ltd is ₹ 4,348/- which trades at 40x the earnings estimate for FY23E of ₹ 108/-
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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12 Nov

Looking at quarterly run rate of $140 mn in US market – Cipla

Update on the Indian Equity Market:
On Wednesday, Nifty ended 0.9% higher at 12,749 led by the pharma & metal stocks. The top gainers for Nifty 50 were Hindalco (+8.0%), Tata Steel (+7.7%), and Dr Reddy (+4.1%) while the losing stocks for the day IndusInd bank (-5.2%), Reliance (-4.1%), and Titan (-2.1%). Top gaining sectors were Pharma (+3.6%), Metal (+3.5%), and IT (+1.7%) while the losing sectors for the day were PSU Bank (-0.5%), and Media (-0.3%).

Edited excerpts of an interview with Mr Umang Vohra, MD & Global CEO, Cipla Ltd; dated 10th November 2020 from CNBCTV18:

Cipla’s second-quarter performance exceeded analyst estimates on most parameters. Talking about growth sustaining in the second half of FY21E Mr Vohra said that the numbers are in response to the market forces and he thinks these numbers in a certain range will continue to exist going forward at least for the next one quarter.
There might be a marginal dip or off in revenue or in profit but by and large, Cipla is on this trajectory for 3QFY21E as well.

On the outlook for the India business, he believes that the COVID portfolio growth will begin to abate as cases go down in India. Other than COVID, Cipla’s businesses are fairly strong on its fundamentals. Non- Covid portfolio has been doing well and beating the industry growth for the 5th consequent quarter.

Cipla can expand its margin trajectory by about 300 basis points from the start of the year on a normalise basis to where it thinks it would be in 2-3 years.

Talking about US markets Mr Vohra said that approximately $140 million is now the new base of the US and as they launch new products this run rate would increase.

The Albuterol category is a fairly large category, Perrigo was in the market till about a month and a half back, and Perrigo will be back in the market soon as well.

He thinks that the arrival and the departure of players may create a little bit of short-term pressure in volumes, but he doesn’t think that the prices would correct as significantly because of Perrigo’s arrival back into the market.

The Company has finished the remediation efforts and has reverted back to the US FDA on Goa facility. The Company is also expecting some response from USFDA on the Goa facility soon.
The Company is open for acquisitions which would be strategic for the Company rather than big acquisitions. But as of now, the Company is focused on delivering organic growth with timely product launches.

Consensus Estimate: (Source: market screener website)

The closing price of CIPLA was ₹ 741/- as of 11-November-2020. It traded at 25x/ 23x/19x the consensus book value estimate of ₹ 29.5/32.9/38.4 for FY21E/ FY22E/ FY23E respectively.

The consensus target price of ₹ 882/- implies a PE multiple of 23x on FY23E EPS of ₹ 42.4/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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11 Nov

Strong 2QFY21 performance, expect 2HFY21 to better – Emami

Update on the Indian Equity Market:

On Tuesday, Nifty closed 1.4% higher at 12,631. Within NIFTY50, BAJFINANCE (+8.9%), INDUSINDBK (+7.3%), and LT (+6.9%) were the top gainers, while TECHM (-5.7%), CIPLA (-5.4%), and HCLTECH (-5.0%) were the top losing stocks. Among the sectoral indices, FINANCIAL SERVICES (+4.1%), BANK (+3.9%), and PRIVATE BANK (+3.7%) were the top gainerswhilePHARMA (-4.3%), and IT (-3.9%) were the only losing sectors.

Strong 2QFY21 performance, expect 2HFY21 to better – Emami

Excerpts of an interview with Mr. N H Bhansali, CEO-Finance& CEO, Emami, aired on CNBC-TV19 on 9thNovember 2020
● In 2QFY21, Emami delivered 10% YoY volume growth, 11% YoY revenue growth and 33% YoY EBITDA growth.
● In 2QFY21, excluding the winter portfolio which had a weak quarter, the revenue growth was 28% YoY.
● The growth was seen across all brands, channels and geographies. Kesh King had highest ever quarterly growth, healthcare sector delivered 50%+ YoY growth in 2QFY21.
● Now winter is setting in and management expects 2HFY21 to be better. Trajectory in October 2020 was good and all brands are performing well.
● Healthcare segment, which includes chyawanprash and other immunity boosters, growth was 40% in 1QFY21 and 53% in 2QFY21.
● There is no extra inventory with the dealers now and the supply chain has settled well from the interim covid-19 disruption. So growth would continue.
● In line with the FMCG industry, Emami’s advertising expenses have now returned to pre-covid levels.
● Management expects EBITDA margin to expand from 26% in FY20 to ~30% for FY21E.

Consensus Estimate (Source: market screener website)
● The closing price of EMAMILTD was ₹ 380/- as of 10-November-2020. It traded at 38x/ 31x/ 26x the consensus EPS estimate of ₹ 10.1/12.1/14.5 for FY21E/ FY22E/ FY23E respectively.
● The consensus target price of ₹ 391/- implies a PE multiple of 27x on FY23E EPS of ₹14.5/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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10 Nov

Company growing better than the industry average – Berger Paints

Update on the Indian Equity Market:
On Monday Nifty closed 1.6% higher at 12,461. Among the sectoral indices, Bank (+2.7%), Pvt Bank (+3.3%), and Fin services (+1.9%) closed higher. Media (-0.01%) closed lower. Cipla (-2.9%), Adani ports (-1.1%), and Maruti (-0.6%), closed on a negative note. Divis labs (+5.4%), Bharti Airtel (+5.1%), and IndusInd Bank (+4.9%) were among the top gainers.

Excerpts from an interview of Mr. Abhijit Roy MD & CEO, Berger paints with CNBC-TV18 dated 6th November 2020:

● The months of August and September saw a good pickup in demand.

● On volume growth, Mr. Roy said there was a 17% growth in the decorative business and overall all volume growth was around 16%.

● Speaking about growth sustainability, he said October was better and November 20 to date is good. On the back of this, the company expects 3QFY21 to be better than 2QFY21.

● In Q2FY21, the performance of Berger was better than the industry.

● On the Expense front, he said there are savings in fixed expenses and some of these expenses like traveling and rent will be lower than normal in the near term. There is also some amount of savings on the raw material front.

● On the demand trend, he said most of the demand is coming from Tier 2, 3, and 4 towns. The demand is also picking up in urban centers.

● On products, he said earlier the lower and economic products were seeing a higher demand but since October month there is a revival in premium and luxury category as well.

● The company plans to expand its capacity. The current capacity utilization was around 93%.

● The new plant is expected to be operational by December 21.

Consensus Estimate: (Source: market screener and Investing.com websites)
● The closing price of Berger Paints was ₹ 650 as of 09-November-2020. It traded at 104x/ 74x/ 62x the consensus Earnings per share estimate of ₹ 6.27/8.78/10.5 for FY21E/ FY22E/ FY23E respectively.
● The consensus average target price for Berger Paints is ₹ 489/- which implies a PE multiple of 47x on FY23E EPS of ₹10.5/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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09 Nov

Albuterol contribution to be higher from 4Q onwards – Lupin

Update on Indian equity market:
Following its global peers, Indian markets continued to rally for the 5th straight session as Nifty closed the day 143 points higher at 12,157. Within the index, the gainers were led by RELIANCE (3.6%), BAJAJFINSV (3.5%), and INDUSINDBK (3.3%) whereas Maruti (-2.9%), GAIL (-1.9%) and BHARTIARTL (-1.5%) were the laggards. Among the sectoral indices, PVT BANK (2.1%), BANK (1.9%), and FIN SERVICE (1.9%) led the index higher while PHARMA (-0.7%) and FMCG (-0.1%) were the only laggards.
Excerpts of an interview with Mr. Nilesh Gupta, Managing Director, Lupin with CNBC-TV18 dated 05th November 2020:
The company is witnessing growth in the US markets on the back of the launch of Albuterol. The drug is a great growth opportunity for Lupin.
The Albuterol story will really come out in 4QFY21E. The company is still in ramp-up mode. Lupin is expected to get more business in 3Q as compared to 2Q and will see a steady-state of demand from 4Q onwards.
The reason for optimism on Albuterol is a major competitor, Perrigo going out of business with no timeline of coming back.
Commenting on the re-launch of Glumetza, there were some teething problems regarding the product but management is confident about the re-launch of the drug.
The company is able to return to a $180- 200mn quarterly run rate in the US markets. The remediation costs and research and development spend in the past have started fructifying for the company.
In the Indian business, the company is expected to grow 6-8% YoY. The business has suffered in the 1st half of FY21 due to the COVID-related slowdown in demand from the acute segment. The market is expected to grow in the range of 4-5% and the company is confident of beating the industry growth rate.
Consensus Estimate: (Source: market screener website)
The closing price of Lupin was ₹ 931/- as of 05-Nov-2020. It traded at 40x/ 25x/ 21x the consensus EPS estimate of ₹ 23/ 38/ 45 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 945/- implies a P/E multiple of 21x on FY23E EPS of ₹ 45/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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