Lupin Q2 Earnings Surge! ICICI Securities Eyes 20% Upside - Your Next Big Pharma Investment?

Lupin announced strong financial results for the second quarter of fiscal year 2026 (Q2FY26), surpassing estimates from ICICI Securities. The company reported a beat of 9.5% in revenue, 26.3% in EBITDA, and 21.8% in Profit After Tax (PAT) compared to the brokerage's projections. This outperformance was largely driven by key exclusive products, namely Tolvaptan and Mirabegron.

However, the report highlights upcoming challenges. Tolvaptan's exclusivity in the US market is set to expire in November 2026, leading management to forecast a quarterly revenue run-rate of USD 275–300 million in the latter half of FY26, down from USD 315 million in Q2. While exclusivity for gSpiriva is expected to continue in the near term, there remains a litigation overhang concerning Mirabegron supplies, with the next court hearing scheduled for February 2026.

Looking ahead, Lupin aims to bolster its global presence by expanding its portfolio, with a strategic focus on respiratory, Central Nervous System (CNS), and ophthalmology products. This includes potential acquisitions, such as the one for VISUfarma.

Positive news includes an upward revision in EBITDA margin guidance. Lupin now expects FY26 EBITDA margins between 25-26%, an increase from the previous 24-25% range, and anticipates 24-25% margins for FY27.

Outlook Despite the strong Q2 performance, ICICI Securities has slightly reduced its FY26 Estimated Earnings Per Share (EPS) by approximately 1% to account for a weaker-than-expected performance in the Indian market. The brokerage maintains its 'HOLD' recommendation on Lupin shares with an unchanged price target (TP) of INR 1,950. This target is based on a valuation multiple of 20 times FY27E EPS.

Impact This news has a moderate impact on Lupin's stock, as it reflects strong operational performance and improved guidance, balanced by concerns over product exclusivity and litigation. Investors will watch the company's execution on its expansion strategy and the resolution of legal challenges. Rating: 6/10.

Definitions: EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance. PAT: Profit After Tax. The net profit remaining after deducting all expenses and taxes. EPS: Earnings Per Share. The portion of a company's profit allocated to each outstanding share of common stock. TP: Price Target. The future price level that an analyst or broker predicts a stock will reach. Exclusivity: The sole right granted to a company to sell a particular drug or product for a specific period, often due to patent protection. Litigation Overhang: Potential legal risks or uncertainties that could negatively affect a company's stock price. CNS: Central Nervous System. The part of the nervous system comprising the brain and spinal cord.