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Buy Lupin, target of Rs 900: Karvy

Posted on: April 19th, 2009 and is filed under Brokerage Recommendations.

Karvy Stock Broking has recommended a buy rating on Lupin with a price target of Rs 900 in its April 17, 2009 research report. “Lupin’s net revenues for the quarter are expected to be up by 20% to Rs 9 billion for the quarter.

Revenue growth is expected to be driven by strong performance in domestic formulations and formulations exports. However margins are expected to be lower at 17.2 % than the preceeding quarter on back of higher other expenses. Profits for the quarter is expected to be higher by 4% to Rs 1001 million for the quarter on back of higher interest charges and lower other income.”

“We introduce FY 11 estimates and roll over our price target to FY 11. The stock is currently quoting at Rs 11.1 x FY 2010E and 9.2x FY 11E. With gradual ramp up of niche opportunities in both US and Europe we believe the company is on a strong wicket. The high margin formulations business contributes 70% of the revenues. With earnings growth of 18.4% in the period FY 09-11E we rate the stock as a BUY with a price target of Rs 900 based on 12x FY 11E (EPS Rs 75.3),” says Karvy Stock Broking’s research report.

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