13 May 2015
4QFY15 Results Update | Sector: Healthcare
Lupin
BSE SENSEX
27,251
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel.Per (%)
Free float (%)
Financials & Valuation (INR b)
Y/E Mar
Sales
EBITDA
Adj. PAT
Adj. EPS
( )
EPS Gr. (%)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
2015 2016E 2017E
126.0
34.5
24.0
53.5
38.1
30.4
40.6
31.6
8.6
145.2
41.6
27.5
61.3
14.6
251.9
27.3
37.9
27.6
6.7
169.7
49.6
33.5
74.6
21.9
316.8
26.2
36.2
22.7
5.3
S&P CNX
8,235
LPC IN
447.5
2,112/904
-8/20/61
53.4
CMP: INR1,691
TP: INR1,950 (+15%)
Buy
Transient earnings moderation – long term outlook intact
Lupin’s (LPC) 4Q PAT at INR 5.5b (-1% YoY) was 14% below est. on sharp revenue miss
(10% below) and resultant negative operating leverage hurting margins (25.1% vs
27.9% est). EBITDA at INR7.7b (-5% YoY) fell 19% below expectations while lower tax
rate (20% vs 30% est) was a respite.
Slowest revenue growth in last 20 quarters:
Flat revenue growth in 4Q (INR30.5b)
was a disappointment, marred by fewer US launches and fx headwinds (net impact of
INR367m). Lower than expected market share in gCelebrex and sharper base business
price erosion led to weak US sales (-6% YoY, 45% of sales). US branded business (5% of
sales, flat YoY) is likely to see contraction due to generic competition in Suprax. India
growth was robust (+15%) while Japan growth (down 9% YoY, +5% in JPY terms) was
hurt by fx movement. EU/RoW growth (+12/3%) was also below est.
Margins contract on unfavorable operating leverage:
Gross margin improved +81bp
YoY due to hedging benefits while surge in R&D spend (+26% YoY) and higher staff
cost (INR 400m – accturial impact) dragged overall EBITDA margins to 25.1% (down
142bp YoY), at six quarter low. We anticipate annualized EBITDA margins to improve
by 180bp over FY15-17E (to 29.2%) led by high margin US launches (including
gNexium, opthalmics and other Para IVs) and steady improvement in domestic
profitability (chronic focus).
Analyst meet takeaways:
(a) M&A - key growth driver; to target bigger size
acquisition in complex generic space (b) Acquired front end branded generic company
in Brazil (USD 30m sales); deal size less than USD 75m, (c) To file first inhaler product
in CY16 for US & Japan, (d) 5 out of 6 facilities successfully cleared by US FDA in FY15
(e) Expect 15-16 launches in FY16 in US including – Lumigan & Lansoprazole ODT (1Q),
Nexium (2Q), Welchol (3Q), Glumetza (4Q) and Namenda.
Valuation and view:
We trim our FY16/17E EPS estimates by 8/9% respectively mainly
to factor (a) Suprax generic competition and (b) delay in US launches (including
gNexium). We believe delays in US approvals is a transient setback to structurally
strong growth story for LPC (est 19% EPS CAGR) as we could see bunching up of
approvals going ahead. Hence, our target price is lowered to INR 1950 (26x FY17E).
Strong Balance Sheet (net cash), high return ratios to help sustain multiple premium.
M.Cap. (INR b)/(USD b) 756.7/11.8
Avg Val (INRm)/Vol ‘000 1,146/760
BV/Sh.(INR) 197.4
Estimate change
TP change
Rating change
8-9%
13%
Investors are advised to refer through disclosures made at the end of the Research Report.
Arvind Bothra(Arvind.Bothra@MotilalOswal.com);+91
22 3982 5584
Amey Chalke
(Amey.Chalke@MotilalOswal.com);+91 22 3982 5423
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Lupin
4Q Result Snapshot
Exhibit 1: Quarterly Snapshot (Revenue mix)
(INR m)
Revenue split
4Q FY14
14,699
1,444
13,255
5,763
3,218
795
3,126
2,914
30,515
3Q FY15
14,043
1,364
12,679
7,438
3,422
805
2,983
2,758
31,449
4Q FY15
13,779
1,440
12,339
6,637
2,943
891
3,215
3,075
30,540
YoY
(6.3)
(0.3)
(6.9)
15.2
(8.5)
12.1
2.8
5.5
0.1
QoQ
(1.9)
5.5
(2.7)
(10.8)
(14.0)
10.7
7.8
11.5
(2.9)
FY14
48,871
5,073
43,560
24,795
12,955
2,934
10,171
11,140
110,866
FY15
YoY
US
Branded
Generic
India
Japan
Europe
ROW
APIs
Total revenues
56,576
15.8
5,092
0.4
51,484
18.2
29,679
19.7
13,239
2.2
3,279
11.8
11,283
10.9
11,941
7.2
125,997
13.6
Source: Company, MOSL
Exhibit 2: Quarterly Profit and Loss statement
(INR m)
Total revenues
Raw material cost
Gross profit
Gross margin (%)
Staff cost
% of Total Revenues
Other expense
% of Total Revenues
R&D expense
% of Total Revenues
EBITDA
EBITDA margin (%)
Depreciation
% of Total Revenues
EBIT
Interest cost
Other income (net)
PBT
Income tax
Effective tax rate (%)
Minority interest
Net Profit - reported
Adjusted Net Profit
4Q FY14
30,515
9,804
20,711
67.9
3,896
12.8
6,280
20.6
2,456
8.0
8,079
26.5
743
2.4
7,336
122
742
7,956
2,327
29.2
100.1
5,530
5,530
3Q FY15
31,449
10,236
21,214
67.5
4,159
13.2
5,948
18.9
2,605
8.3
8,502
27.0
1,103
3.5
7,399
26
1,161
8,534
2,387
28.0
132.8
6,015
6,015
4Q FY15
30,540
9,564
20,977
68.7
4,822
15.8
5,406
17.7
3,096
10.1
7,653
25.1
1,072
3.5
6,581
25
413
6,970
1,362
19.5
137.1
5,470
5,470
YoY %
0.1
(2.5)
1.3
81 bp
23.8
302 bp
(13.9)
(288)bp
26.1
209 bp
(5.3)
(142)bp
44.2
44.1
(10.3)
(79.8)
(44.3)
(12.4)
(41.4)
(969)bp
37.0
(1.1)
(1.1)
QoQ %
(2.9)
(6.6)
(1.1)
123 bp
15.9
256 bp
(9.1)
(121)bp
18.9
185 bp
(10.0)
(198)bp
(2.8)
0.1
(11.1)
(6.8)
(64.4)
(18.3)
(42.9)
(842)bp
3.2
(9.1)
(9.1)
FY14
110,866
38,174
72,692
65.6
14,647
13.2
20,724
18.7
9,294
8.4
28,028
25.3
2,610
2.4
25,419
267
3,164
28,316
9,622
34.0
331.3
18,363
17,364
FY15
125,997
41,570
84,427
67.0
17,473
13.9
21,473
17.0
10,988
8.7
34,493
27.4
4,347
3.5
30,146
98
4,101
YoY %
13.6
8.9
16.1
144 bp
19.3
66 bp
3.6
(165)bp
18.2
34 bp
23.1
209 bp
66.6
46.6
18.6
(63.2)
29.6
34,148
20.6
9,704
0.9
28.4
(556)bp
411.9
24.3
24,032
30.9
24,032
38.4
Source: Company, MOSL
13 May 2015
2

Lupin
Dismal quarter, marred by weak topline performance
Lupin's 4QFY15 revenues remained flat YoY at INR30.5b (v/s est. INR33.9b). Key
markets of US and Japan (55% of sales) registered negative growth, dragging overall
performance. US generics de-grew 7% YoY to INR12.3b on slower ramp up in newly
launched products (gCelebrex – 11% market share). Branded US sales were flat at
INR1.4b (10% of US sales) with recently acquired brands Alinia and Locoid yet to
scale-up meaningfully. India business delivered 15.2% growth (in line) while Japan
sales declined 8% YoY to INR2.9b (v/s est. INR3.6b) on continued fx headwind. ROW
business grew 3% YoY to INR3.2b, supported by 15% YoY growth in South Africa
region.
Unfavorable operating leverage hurts profitability
EBITDA declined 5% YoY to INR7.6b (v/s estimate of INR9.5b, 19% miss), slower than
top line growth due to 142bp contraction in EBITDA margins (YoY). This was despite
marginal improvement in gross margins (up 81bp YoY) led by better mix (higher
India contribution) and hedging benefits. EBITDA margin miss (25% vs 27.9% est.)
was mainly due to pension fund revaluation in 4Q (INR 200m), ESOP impact (INR
200m) and new hiring in various geographies. Planned scale-up in R&D also
pressurized margins (10.1% of sales vs 8.0% in 4QFY14).
Exhibit 3: Revenue growth flat, 1 time in last 10 qtrs
Sales (INR b)
38
29
35
18
9
22
25
25
24
26
30
33
31
21
20
31
YoY Growth (%)
36
18
5
31
31
20
23
24
22
24
25
st
Exhibit 4: EBITDA margins disappointed
EBITDA (INR b)
EBITDA margin (%)
26
32
25
27
25
0
5
6
6
5
6
7
8
11
8
9
8
Source: Company, MOSL
Source: Company, MOSL
Exhibit 5: Scale up in R&D expense
R&D expense (INR b)
10
8
4
1
2
2
2
2
3
2
2
3
3
3
9
% of sales
9
7
10
8
Exhibit 6: Gross margin improved on hedging benefits
(4QFY15)
Gross Profit (%)
69
66
63
14
63
66
64
Gross Margin (%)
70
68 67 68
69
8
8
8
16
17
16
18
19
21
22
21
22
21
Source: Company, MOSL
Source: Company, MOSL
13 May 2015
3

Lupin
India business – growth momentum continues (~22% of sales)
In 4Q, domestic business grew 15.2% to INR 6.6b (v/s est INR6.8b), mainly on
account of new launches and better traction witnessed in chronic products (66%
of India sales).
For full year (FY15), domestic business continued to outpace industry growth
registering 19% (vs 12% for industry). LPC has launched 17 new brands in FY15
(52 products in total).
The management expects to maintain this momentum going forward and has
guided for higher than industry growth for FY16E. We have factored 18.5%
growth in FY16E/17E.
The company field force strength stands at 5400 with no meaningful additions
planned in the forthcoming quarters. The primary focus will be on improving
field force productivity (currently at INR5.5m/per annum per person).
Japan (~10% of sales)
In 4Q, Japanese business recorded 5% growth in constant currency, reflecting
weaker traction in the business. In rupee terms, business declined 9% YoY to INR
2.9b owing to sharp depreciation in JPY-INR. For FY15, sales grew 11% in
constant currency.
Kyowa sales also delivered similar numbers with 5% growth in constant currency
and 9% decline in rupee terms (in 4QFY15), mainly on account of price cut
impact. Kyowa accounts for 66% of total Japan revenues. Over full year, Kyowa
sales grew 6% YoY (15% on constant currency).
I’rom (34% of Japan sales) reported a 7% YoY decline in INR terms due to
continued restructuring (CRAMS business). Contract business accounts for 30%
of I’rom business. For FY15, sales decline 9% YoY.
Exhibit 8: Japan – currency headwinds impact growth
Kyowa ex I'rom (INR b)
1
1
3
2
1
3
1
2
I'rom (INR b)
1
3
1
3
1
3
Exhibit 7: Domestic Formulations - Growth recovering
India Sales (INR b)
43
29
18
6
14
6
6
-5
6
9
7
14
2
7
6
8
8
7
7
20
14
15
YoY Growth (%)
1
2
1
2
1
2
1
2
Source: MOSL, Company
Source: MOSL, Company
Slower pace of approvals hurt US momentum
US Generic business (40% of sales):
Loss of exclusivity in key products like
gCymbalta, gNiaspan and slower ramp up in recently launched products –
gCelebrex, gYaz, gDiovan has resulted in weaker US generics sales in 4Q. LPC had
launched gYaz in 2QFY15, however the revenue ramp-up has been slower in this
product (mkt share of 2%). gCelebrex launch in Dec’14 has captured only 11%
market share despite being a five player market, reflecting weaker execution.
13 May 2015
4

Lupin
Management was hopeful of ANDA approval for gNexium in 4Q. However,
subsequent queries on their filings led to delay in approval. Potential delay in
gNexium approval could thwart FY16 growth prospects in US as it is likely to be a
significant contributor to LPC’s US business growth (and profitability). Currently,
Nexium is only two player market with Teva (30% market share) as the sole
generic player.
The Company launched 3 products in the US market (in 4Q), taking the number
of total launches to 12 products during FY15. Till date it has filed for 210
products in US, while pending filings stands at 99. Pending filing includes 34 FTF
opportunities (Mkt size USD 12.5b) with 15 exclusive products (USD 3.1b). Out
of 77 marketed products, Lupin is market leader in 28 products. Going forward,
LPC expects to launch 15-20 generic products annually over FY16-17, which will
support 18-20% growth momentum over FY16-17E.
US branded business (5% of sales):
Impact of genericasation in Antara brand
continued to impact US brand sales, which now account for 10% of US sales (vs
15-20% earlier). In April 2015, Aurobindo (ARBP) received approval for Lupin’s
(LPC) brand Suprax (100mg/5ml; 200mg/5ml suspension) implying maiden
generic competition for LPC’s flagship brand in US (~90% of US branded sales).
Suprax (suspension) accounts for 65% of LPC’s US brand sales (~USD 55m) and
garnered 75%+ of prescription (TRx) share of Suprax franchise. Launch of new
dosage forms like chewables, capsules, tablets, etc has reduced the share of
suspension form considerably over the last four years. We expect limited
competition (apart from ARBP) in this product in other forms to help LPC
effectively manage the product lifecycle and retain some value in the product.
Overall, contribution from branded business was ~5% (of total sales) in 4QFY15.
LPC continues to look at expanding its brand portfolio in US and is eyeing mi-
sized acquisitions (sub USD100m) to achieve the same. For FY15, LPC registered
INR 5b revenues in US branded segment, accounting for 4% of total revenues.
Exhibit 9: US revenues: Generic business continues to drive growth
US Generics (USD m)
US Branded (USD m)
27
214
17
15
246
195
32
112
47
145
30
181
20
154
17
149
24
195
22
195
23
199
Source: Company, MOSL
Other takeaways from earnings call
Significant price erosion witnessed on products launched in FY14 (10-12%)
resulted in base business erosion in US. This was largely due to increased
channel consolidation. However, management expects stable pricing ahead. The
company is likely to launch 15-20 new generic products in FY16 including
13 May 2015
5

Lupin
gNexium ,gLumigan ,gWelchol ,gNamenda, gGlumetza which can contribute 15-
18% additional growth in US.
LPC has foray into NCE development and three candidate in clinical pipeline.
One product (CNS category) in Phase 2 clinical trials and other two in phase 1.
Management guided for 15% revenue growth and 28-30% EBITDA margin in
FY16. Expect soft 1Q though due to fewer launches and impact of Suprax
generic competition.
Much more aggressive stance on M&A, target size can be much larger
(USD500m+) compared to smaller sized targets so far.
Got five of six USFDA approved facilities successfully inspected in FY15.This
reflects high focus on compliance and quality and provides visibility for no
regulatory issues for next 18mths at least.
Tax rate was significantly lower in 4Q due to lower shipment to US.
Capex guidance stands at INR 8-9b for FY16.
Overall, management inspired confidence on medium term outlook as the
company's focus on differentiated pipeline in US pans out, currently affected by
delays in approval timeline. While we expect street to trim expectations, recent
correction factors a soft FY16 outlook while medium term outlook remains
strong. A correction post 4Q disappointment should be used to add. Remain
positive on the company.
13 May 2015
6

Lupin
Operating metrics
Exhibit 10: Key operating metrics
1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15
Revenue Mix (%)
US
India
Japan
Europe
ROW
APIs
Revenue Gr. (%)
US
India
Japan
Europe
ROW
APIs
As % of sales
Raw material
Staff cost
R&D cost
Other expenses
Tax Rate
Margins (%)
Gross Margins
EBITDA Margins
EBIT Margins
PAT margins
63.1
19.1
18.7
12.6
60.3
20.3
20.2
13.0
62.1
23.1
22.8
13.6
64.4
24.1
21.1
16.1
63.9
22.1
21.8
16.6
68.0
23.7
25.9
15.4
62.4
24.6
24.9
16.0
67.9
26.5
26.5
18.1
66.3
32.2
31.5
19.0
65.7
24.9
24.0
67.5
27.0
27.2
68.7
25.6
22.9
36.9
13.6
8.0
22.4
29.8
39.7
13.4
4.2
22.4
32.6
37.9
12.8
9.7
16.5
38.1
35.6
13.0
7.9
19.4
20.7
36.1
13.6
8.1
20.2
34.9
32.0
14.0
8.3
22.1
38.2
37.6
12.7
9.1
16.0
34.4
32.1
12.8
8.0
20.6
29.2
33.7
12.5
7.4
14.1
39.0
34.3
14.1
9.1
17.6
23.1
32.5
13.2
8.3
18.9
28.0
31.3
15.8
10.1
17.7
19.5
36.2
28.0
15.0
2.1
8.3
10.4
44.8
62.7
25.0
99.8
13.7
36.3
10.2
34.9
27.1
14.7
2.8
9.8
10.7
29.3
41.6
18.4
85.4
35.8
37.5
21.1
42.1
23.1
14.8
2.4
7.9
9.5
38.5
67.9
13.9
48.2
(7.1)
20.1
18.8
45.2
22.3
10.8
2.6
9.5
9.6
35.6
49.0
43.0
2.2
45.4
50.7
0.2
41.4
24.3
12.1
4.0
8.1
10.0
9.1
24.9
(5.1)
(12.2)
106.3
7.1
4.8
39.3
25.2
11.8
2.8
10.0
10.9
17.5
32.4
9.4
(6.3)
18.4
20.2
19.6
45.5
21.8
12.5
2.2
8.1
10.0
21.0
30.6
13.9
1.7
10.5
23.2
26.3
48.2
18.9
10.5
2.6
10.2
9.5
20.3
28.2
1.8
16.9
20.5
30.0
10.0
48.9
23.2
10.4
2.1
6.5
8.9
35.7
60.3
29.2
16.8
(29.3)
8.8
20.4
40.8
25.6
11.1
2.8
9.4
10.2
18.4
22.9
20.4
11.8
18.2
11.7
11.2
44.7
23.7
10.9
2.6
9.5
8.8
5.4
3.5
14.4
(8.0)
21.8
24.0
(7.2)
45.1
21.7
9.6
2.9
10.5
10.1
0.1
(6.3)
15.2
(8.5)
12.1
2.8
5.5
17.9
20.2
19.1
Source: Company; MOSL
13 May 2015
7

Lupin
Valuation and view
Lupin has consistently re-rated over the last five years following consistent earnings
performance, improvement in Balance Sheet health and return ratios. Recent
correction largely factors the likely earnings slowdown in FY16E due to delay in key
US approvals as well as genericisation of Suprax brand.
Cut EPS estimates by 8-9% factoring delayed approvals, Suprax generic
We incorporate the impact of generic competition to Suprax brand (4% hit on
EBITDA), potential delays in US launches and adverse fx movement affecting RoW
sales. Consequently, we lower our revenue assumptions over FY16-17E by 6-7%,
implying revenue CAGR of 16% over FY15-17E. Slower topline growth (high margin
sales loss) coupled with elevated R&D spend (~9% of revenues) would translate into
170bp reduction in EBITDA margin assumptions to ~29%, implying EBITDA CAGR of
20% (FY15-17E). Consequently, our FY16-17E EPS assumptions are lowered by 8-9%.
Exhibit 11: Change in estimates
Old
154,512
46,832
30.3
30,156
FY16E
New
145,239
41,625
28.7
27,758
% chg
(6.0)
(11.1)
(165.0)
(8.0)
Old
182,023
56,383
31.0
37,284
FY17E
New
169,728
49,617
29.2
33,915
% chg
(6.8)
(12.0)
(174.2)
(9.0)
Sales
EBITDA
EBITDA Mar. %
PAT
Source: Company, MOSL
Long term outlook remains firm
However, we believe long term growth outlook for Lupin remains firm and we
expect the company to sustain premium multiples (vs peers). Strong execution track
record, net cash Balance Sheet and high capital efficiency justify premium multiple.
Earlier than expected launch of key US products (mainly gNexium) could drive
earnings upgrades.
We value Lupin at 26x FY17E EPS, at par with large cap peers (1 year forward P/E)
which is justified noting:
Robust earnings growth of 19%, despite sizeable base
High return ratios (FY15E: RoE of 30%, RoCE of 41%)
Strong Balance Sheet (Net cash surplus of INR 16b+)
Key catalysts to drive stock performance over medium term are:
Potential M&A to expand reach in RoW markets (Eastern Europe, Latam).
Rebuilding of US branded business, with scale-up of new brands Alinia and
Locoid) and potential new acquisitions.
Niche US generic launches like gWelchol, gNexium, gGlumetza, etc in the next 4-
6 quarters.
We believe that the following factors pose risks to our thesis:
Regulatory delays affecting key US launches.
Slower than expected turnaround of Japan business (I’rom acquisition), delaying
margin improvement.
13 May 2015
8

Lupin
Exhibit 12: P/E valuation band (10 years)
37.0
25.0
17.5
13.0
1.0
17.2
7.0
PE (x)
Median(x)
Peak(x)
Min(x)
Avg(x)
30.1
25.7
Exhibit 13: Higher premium relative to Sensex
160
80
9.2
0
-80
Lupin PE Relative to Sensex PE (%)
LPA (%)
59.7
Source: Company, MOSL
Source: Company, MOSL
13 May 2015
9

Lupin
Story in charts
Exhibit 14: Revenue mix in FY15
9
9
43
US
Europe
India
Japan
23
3
RoW
APIs
Source: Company, MOSL
5
31
FY09
5
40
FY10
9
49
FY11
9
60
FY12
85
FY13
100
FY14
114
132
155
9
11
12
13
Exhibit 15: Healthy revenue growth outlook on expanded
base
Formulations (INR b)
API (INR b)
15
10
FY15 FY16E FY17E
Source: Company, MOSL
Exhibit 16: US business to be driven by strong
ANDA pipeline
Generic sales (USD m)
Branded Sales (USD m)
83
41
46
Exhibit 17: Forecast sustained improvement in margins
EBITDA (INR b)
EBITDA margins (%)
24.2
27.4
28.7
29.2
145
127
221
FY10
133
143
87
18.0
17.8
17.3
20.3
310
FY11
367
FY12
547
FY13
712
FY14
837
FY15
1,005
1,185
9
FY10
10
FY11
12
FY12
20
FY13
27
FY14
34
42
50
FY16E FY17E
FY15
FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 18: Expect strong EPS CAGR of 18% over FY15-17E
Core EPS (INR/ share)
1
0
2
2
18
6
23
39
53
61
75
Exhibit 19: Higher tax outflow constrained PAT margins
PBT margin (%)
26
18
18
15
18
21
19
19
20
PAT margin (%)
27
28
28
14
13
14
17
11
17
19
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E
Source: Company, MOSL
FY10
FY11
FY12
FY13
FY14
FY15
FY16E FY17E
Source: Company, MOSL
13 May 2015
10

Lupin
Exhibit 20: Industry leading return ratios
ROIC (%)
34.6
29.6
21.7
20.0
18.8
22.5
20.4
14.8
58
FY10
FY11
FY12
FY13
FY14
FY15
FY16E FY17E
FY09
86
FY10
100
FY11
109
FY12
98
FY13
93
FY14
99
FY15
24.3
28.6
RoE (%)
30.4
29.0
33.4
37.2
173
127
26.2
90
148
176
Exhibit 21: Rich ANDA pipeline
ANDA filed
ANDA pending
192
210
27.3
Source: Company, MOSL
Source: Company, MOSL
Exhibit 22: Tricor market share (%) sustained at ~20% levels
40.0
30.0
20.0
10.0
0.0
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
TEVA USA
PERRIGO CO
MYLAN
ABBVIE US LLC
LUPIN PHARMA
27.3
22.0
15.1
9.3
Source: Bloomberg, MOSL
Exhibit 23: Trizivir market share (%) – LPC benefits from low competition
LUPIN PHARMA
100.0
80.0
60.0
40.0
20.0
0.0
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
22.6
77.4
VIIV HEALTHCARE
Source: Bloomberg, MOSL
Exhibit 24: Celebrex market share (%)
TEVA USA
ACTAVIS PHARMA
30.0
20.0
10.0
-
Jan-15
Feb-15
Mar-15
Apr-15
Source: Company, MOSL
13 May 2015
11
MYLAN
LUPIN PHARMA
GREENSTONE LLC
PHARMACIA/UPJHN
24.5
23.3
18.1
12.8
11.4
9.1

Lupin
Financials and valuations
Key assumption
Segment growth
2010
34.3
14.5
16.9
32.0
80.6
12.0
27.5
7.3
40.4
20.2
2011
27.4
22.2
20.9
35.2
43.5
65.3
26.9
8.3
38.5
20.2
2012
15.2
15.0
33.0
(14.0)
30.0
(1.1)
21.1
7.4
36.8
20.4
2013
35.7
8.5
33.1
4.3
36.0
11.9
36.0
7.4
36.8
23.5
2014
15.4
(5.6)
(11.1)
22.1
21.3
17.3
17.2
8.2
33.8
26.6
2015
15.1
17.8
0.7
0.9
10.9
7.2
13.6
8.6
32.6
28.3
2016E
13.7
17.5
8.0
15.0
22.0
10.9
15.3
9.0
32.0
29.7
2017E
17.7
18.5
12.0
15.0
21.0
10.0
16.9
9.0
32.0
30.2
US
India
Japan
Europe
ROW
API
Total Sales
Expenses
R&D Expenses (%)
Cost of sales (%)
EBITDA Margin (%)
Income Statement
Y/E March
Net Sales
Change (%)
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income - Rec.
PBT before EO item
EO Expense/(Income)
PBT after EO item
Tax
Tax Rate (%)
Less: Minority Interest
Reported PAT
PAT Adj for EO items
Change (%)
Margin (%)
(INR Million)
2010
47,736
26.4
8,867
18.6
1,239
7,628
385
1,114
8,356
0
8,356
1,360
16.3
112
6,885
6,885
36.3
14.4
2011
56,478
18.3
10,068
17.8
1,712
8,356
345
1,934
9,944
0
9,944
1,149
11.6
148
8,646
8,646
25.6
15.3
2012
68,204
20.8
11,821
17.3
2,275
9,546
355
2,768
11,960
0
11,960
3,086
25.8
196
8,678
7,917
-8.4
11.6
2013
93,694
37.4
19,981
21.3
3,322
16,659
410
2,997
19,246
0
19,246
5,842
30.4
263
13,142
10,347
30.7
11.0
2014
109,343
16.7
26,505
24.2
2,610
23,895
267
3,688
27,317
-1,000
28,317
9,622
34.0
331
18,364
17,364
67.8
15.9
2015
125,997
15.2
34,493
27.4
4,347
30,146
98
4,101
34,148
0
34,148
9,704
28.4
412
24,032
24,032
38.4
19.1
2016E
145,239
15.3
41,625
28.7
5,080
36,545
107
3,716
40,154
0
40,154
12,046
30.0
350
27,758
27,533
14.6
19.0
2017E
169,728
16.9
49,617
29.2
5,403
44,214
120
4,201
48,295
0
48,295
14,006
29.0
375
33,915
33,549
21.9
19.8
13 May 2015
12

Lupin
Financials and valuations
Consolidated Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred liabilities
Secured Loan
Unsecured Laon
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Investments
Goodwill & Intangibles
Curr. Assets
Inventory
Account Receivables
Cash and Bank Balance
Others
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
E: MOSL Estimates
(INR Million)
2010
800
24,789
25,589
344
1,435
3,348
8,050
11,399
38,766
22,937
7,072
15,865
3,579
264
3,197
27,754
9,715
11,266
2,015
4,759
11,893
9,649
2,243
15,862
38,767
2011
892
31,919
32,811
515
1,412
3,552
7,911
11,463
46,200
25,835
9,075
16,760
4,904
32
3,810
35,359
12,000
12,556
4,202
6,601
14,663
11,941
2,723
20,696
46,200
2012
893
39,236
40,129
723
1,442
5,087
10,470
15,557
57,852
36,274
14,422
21,852
4,437
28
5,644
47,393
17,327
17,800
4,025
8,241
21,503
17,565
3,939
25,889
57,851
2013
895
51,147
52,042
595
1,632
2,972
7,268
10,240
64,509
41,138
16,840
24,298
3,107
21
5,704
55,305
19,489
21,870
4,349
9,597
23,926
19,241
4,684
31,379
64,509
2014
897
68,419
69,316
669
1,779
1,968
4,024
5,992
77,756
45,638
19,283
26,355
3,041
1,785
7,202
62,970
21,295
24,641
7,975
9,060
23,597
18,818
4,779
39,374
77,756
2015
899
87,842
88,741
241
1,182
1,018
3,692
4,710
94,874
50,829
19,639
31,190
1,771
16,584
16,481
64,510
25,036
26,566
4,814
8,095
35,662
28,299
7,363
28,848
94,874
2016E
899
112,320
113,219
591
1,182
1,968
4,024
5,992
120,984
63,021
28,710
34,312
1,135
1,785
7,202
104,169
27,591
38,581
29,084
8,913
27,618
21,224
6,394
76,551
120,984
2017E
899
141,502
142,401
966
1,182
1,968
4,024
5,992
150,541
70,589
34,113
36,476
818
1,785
7,202
136,156
32,213
45,043
49,611
9,289
31,895
24,779
7,116
104,261
150,541
Ratios
Y/E March
EPS (Fully Diluted)
Cash EPS (Fully Diluted)
BV/Share
DPS
Payout (%)
Valuation (x)
P/E (Fully Diluted)
Cash P/E (Fully Diluted)
P/BV
EV/Sales
EV/EBITDA
Return Ratios (%)
EBITDA Margins (%)
Net Profit Margins (%)
RoE
RoCE
Leverage Ratio
Current Ratio
Interest Cover Ratio
Debt/Equity (x)
13 May 2015
2010
17.2
20.3
64.0
3.2
21.5
2011
19.4
23.2
73.5
3.0
18.2
87.1
72.7
22.9
13.5
75.7
18.6
14.4
34.6
27.6
2.3
19.8
0.5
17.8
15.3
29.6
25.3
2.4
24.2
0.4
2012
17.7
22.8
89.9
3.4
20.5
95.2
73.9
18.8
11.2
64.8
17.3
11.6
21.7
24.6
2.2
26.9
0.4
2013
23.1
30.5
116.3
4.0
15.9
73.0
55.2
14.5
8.1
38.1
21.3
11.0
22.5
33.3
2.3
40.6
0.2
2014
38.7
44.5
154.6
6.0
16.0
43.6
37.9
10.9
6.9
28.4
24.2
15.9
28.6
40.1
2.7
89.7
0.1
2015
53.5
63.1
197.4
7.0
15.3
31.6
26.7
8.5
6.0
21.9
27.4
19.1
30.4
40.6
1.8
307.3
0.1
2016E
61.3
72.6
251.9
8.0
15.2
27.5
23.3
6.7
5.0
17.6
28.7
19.0
27.3
37.9
3.8
341.5
0.1
2017E
74.6
86.7
316.8
9.0
14.0
22.6
19.5
5.3
4.2
14.3
29.2
19.8
26.2
36.2
4.3
368.9
0.0
13

Lupin
Cash Flow Statement
Y/E March
Oper. Profit before Tax
Interest/Dividends Recd.
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
(inc)/dec in FA
(Pur)/Sale of Investments
CF from Investments
Change in Net Worth
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
2010
8,867
1,114
-1,089
-4,478
4,414
-6,457
-48
-6,505
6,141
-833
-385
-1,483
3,440
1,348
778
2,126
2011
10,068
1,934
-1,173
-2,647
8,181
-4,545
233
-4,312
174
64
-345
-1,575
-1,682
2,187
2,015
4,202
2012
11,821
2,768
-3,055
-5,370
6,164
-8,736
4
-8,733
430
4,094
-355
-1,777
2,392
-177
4,202
4,025
2013
19,981
2,997
-5,652
-5,166
12,160
-4,497
7
-4,490
475
-5,317
-410
-2,095
-7,348
323
4,025
4,348
2014
26,505
3,688
-9,475
-4,368
16,349
-6,098
-1,764
-7,862
1,593
-4,248
-267
-2,939
-5,861
3,626
4,349
7,975
2015
34,493
4,101
-10,300
7,364
35,657
-17,191
-14,799
-31,991
-1,766
-1,282
-98
-3,681
-6,828
-3,161
7,975
4,814
2016E
41,625
3,716
-12,046
-23,432
9,862
1,713
14,799
16,513
928
1,282
-107
-4,207
-2,104
24,271
4,814
29,084
(INR Million)
2017E
49,617
4,201
-14,006
-7,183
32,629
-7,250
0
-7,250
0
0
-120
-4,733
-4,853
20,526
29,084
49,611
13 May 2015
14

Lupin
Corporate profile Corporate profile
Company description
Lupin is amongst the larger pharma companies that
is actively targeting the regulated generics markets.
Historically very strong in the anti-TB segment, it
has over the years built up expertise in
fermentation-based products and segments like
cephalosporins, prils and statins. Lupin is now a
fully integrated company, with manufacturing
capabilities in APIs and formulations and a direct
marketing presence in the target markets.
Exhibit 22: Stock Vs Index rebased
Exhibit 26: Shareholding pattern (%)
Mar-15
Promoter
DII
FII
Others
46.6
8.7
34.7
10.0
Dec-14
46.7
10.7
31.8
10.8
Mar-14
46.8
11.3
31.9
10.1
Exhibit 27: Top holders
Holder Name
Genesis Indian Investment Co Ltd
National Westminister Bank Plc
Jhunjhunwala Rakesh Radheshyam
ICICI Prudential Life Insurance Company Ltd
Aberdeen Global Indian Equity (Mauritius) Ltd
% Holding
2.7
1.6
1.6
1.6
1.0
Note: FII Includes depository receipts
Exhibit 28:
Top management
Name
Dr. Desh Bandhu Gupta
Dr. Kamal K Sharma
Mr. Nilesh Gupta
Ms. Vinita Gupta
Ms. M D Gupta
Designation
Chairman
Vice Chairman
Managing Director
CEO, Lupin Limited
Executive Director
Exhibit 29: Board of director
Name
Desh Bandhu Gupta
Kamal K Sharma
Nilesh Gupta
Vinita Gupta
R A Shah*
*Independent Director
Name
K U Mada*
Vijay Kelkar*
Richard Zahn*
Dileep C Choksi*
M D Gupta
Exhibit 30: Auditors
Name
Deloitte Haskins & Sells LLP
Ernst & Young LLP
S D Shenoy
Type
Statutory
Internal
Cost Auditor
Exhibit 31: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
MOSL
forecast
63.1
78.0
Consensus
forecast
64.0
78.1
Variation
(%)
-1.4
-0.1
13 May 2015
15

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In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Anosh Koppikar
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For Singapore
13 May 2015
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