Lupin reported a 22.2% YoY decline in Q2FY27 adjusted profit to Rs 1,155 crore as margin compression and US generic pricing pressure hit bottom lines. While domestic business remains strong, brokerage firm Axis Securities has maintained a 'HOLD' rating with a revised target price of Rs 2,180 per share.
Lupin Q2 Profit Drops 22% as US Generic Competition Intensifies
Net Sales reached Rs 7,827 crore, up 11.1% YoY but down 5.4% sequentially.
Adjusted PAT fell 22.2% YoY to Rs 1,155 crore during the September quarter.
Reader Takeaway: Strong domestic prescription sales are offset by margin pressure from intense US generic competition and rising costs.
What just happened
Lupin posted a challenging set of numbers for Q2FY27, characterized by significant margin compression. EBITDA dropped 12.7% YoY to Rs 2,044 crore, with margins contracting by 710 basis points to 26.1%. The results were weighed down by a 5.4% sequential decline in net sales, specifically driven by a 13% QoQ drop in US revenues to US$317 million.
Why this matters
The US market, once a major growth engine, is facing stiff pricing erosion for key products like Tolvaptan and Mirabegron. While the domestic Indian business grew by 13.8% YoY, the consolidated profitability is struggling due to elevated operating costs. Management has set a conservative full-year EBITDA margin guidance of 24–25%.
What changes now
Axis Securities has maintained a 'HOLD' rating on the stock, revising its target price to Rs 2,180. The outlook is now pinned on the success of a complex pipeline. Lupin plans to launch over 60 products in the US over the next three years, including significant respiratory and injectable assets alongside five biosimilars.
Risks to watch
Investors should closely track the competitive intensity in the US generic space, which continues to erode margins. Execution risk remains high as the firm pivots toward more complex assets. Furthermore, regulatory scrutiny from USFDA inspections remains a persistent risk factor that could disrupt growth if unfavorable observations arise.
What to track next
The market will look for a recovery in the US revenue run rate. Management has signaled a baseline target of at least US$1.0 billion in US revenue for FY28, making the progress of R&D-led complex launches the most critical metric for shareholders in upcoming quarters.