Indian pharmaceutical major Lupin Ltd. is set to release its financial results for the second quarter of fiscal year 2024-25 (Q2FY25) on 7 November. Market analysts anticipate solid year-on-year (YoY) profit growth, buoyed by favourable market conditions and robust sales across key regions. However, on a sequential basis, the quarter’s performance is expected to be relatively subdued.
This anticipated growth aligns with broader share market investment trends in the healthcare sector, where Lupin’s strong positioning and new product launches continue to strengthen its market presence.
Expected revenue and profit growth
According to projections, Lupin’s net profit is set to reach an estimated ₹693 crore in Q2FY25, reflecting a substantial 41.7% YoY increase from ₹489 crore in Q2FY24. Despite this notable annual growth, sequentially, profits may drop by around 13.4% from the June quarter’s ₹801 crore figure. This decline is attributed to higher research and development (R&D) spending and a slight drop in gross margin due to rising operational costs.
Revenue-wise, Lupin’s income for Q2FY25 is projected to grow by 9.2% YoY, reaching ₹5,502 crore, up from ₹5,038 crore in the same period last year. However, on a quarter-on-quarter basis, revenue could experience a slight dip of 1.7% compared to the June quarter’s ₹5,600 crore. This sequential softening may result from moderating domestic sales and varying demand across its export markets, particularly in the United States.
Key drivers of Q2 performance
Analysts suggest that stable US sales and new product launches, such as the generics for Spiriva and Myrbetriq, largely drive Lupin’s strong Q2 performance. The company’s US sales are forecasted to stand at around $229 million, reflecting a minor 1% quarterly increase. Sales from newly launched products, including Spiriva and Myrbetriq, have contributed positively, alongside a projected 11% growth in the Indian market, which remains a key revenue contributor.
Additionally, Lupin’s expansion in Europe, the Middle East, and Africa (EMEA), and the rest of the world (ROW) markets support overall revenue growth, with anticipated YoY increases of 5% and 4%, respectively. This balanced international presence has mitigated the impact of domestic market fluctuations, sustaining Lupin’s YoY revenue gains.
Margins and profitability forecast
Profit margins, however, face mixed expectations. Analysts estimate a slight reduction in Lupin’s gross margin to 68.6%, largely due to elevated R&D investments accounting for around 7.5% of total sales. This increased spending, while limiting short-term margins, is seen as a strategic move to expand Lupin’s product pipeline and strengthen its long-term competitive position.
Consequently, the company’s Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) are projected to rise by 25% YoY to ₹1,150 crore, despite a 7% sequential drop.
The EBITDA margin is expected to expand slightly year over year but may contract 120 basis points quarter over quarter to 21.0%, as new product development and operational costs offset some of the gains. Analysts believe these figures highlight Lupin’s strategic commitment to growth while acknowledging the challenges posed by a high-spending phase.
Outlook on Lupin and share market investment trends
As a prominent player in the pharmaceutical sector, Lupin’s anticipated growth aligns well with recent trends in share market investment within the healthcare space. With strong performance driven by product innovations, geographic diversification, and demand resilience, Lupin’s financial health is expected to remain solid, further bolstering investor confidence.
Analysts suggest that the upcoming Q2 results will not only reinforce Lupin’s market strength but also highlight the importance of strategic R&D investments in sustaining long-term profitability.
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