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Sharekhan sees 30% upside in Lupin

Posted on: April 6th, 2009 and is filed under Brokerage Recommendations.

MUMBAI: Sharekhan has maintained a Buy recommendation on pharmaceutical major Lupin. It has set a target price of Rs 840 on the stock, which is an upside of 30 per cent from current market price of Rs 646.

According to the brokerage, global dominance in certain products, focus on niche less-commoditised products, has geographically diversified presence in newer markets such as Japan and a presence in the US branded segment distinguishes Lupin among the mid-cap players in the generic space.

“At 13x FY2009E and 11x FY2010E earnings, Lupin is among the cheapest front-line pharmaceutical stocks. We maintain our Buy recommendation on the stock with a price target of Rs 840,” the report says.

With a leadership position in the anti-TB and other anti-infective segments and growing exposure to the chronic therapy segments, Lupin is one of the fastest growing pharmaceutical companies in the domestic market.

A focus on niche products like injectable cephalosporins along with presence in the branded space through a pediatric antibiotic, Suprax, has enabled Lupin’s US business to grow at a staggering CAGR of 77 per cent over FY2004-08.

With a strong business in India and the USA, Lupin has also made inroads into the other regulated markets of the UK and France. Further, it has entered markets like Japan, Germany, Australia and South Africa throughacquisitions in order to extend its global reach.

Even though the core business remains strong, the US Food and Drug Administration issues relating to its Manindeep facility might remain a drag on the near-term performance of its stock.

source: Economictimes

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