Brokerage firm Prabhudas Lilladher has set a target price of Rs 2,250 for Lupin while retaining an 'Accumulate' rating. This update follows the company's second-quarter earnings, which showed an 8% decline in operating profit. Investors are monitoring margin trends as competition increases for specific U.S. products that currently drive a significant portion of the company's earnings.
Brokerage firm Prabhudas Lilladher has set a target price of Rs 2,250 for pharmaceutical major Lupin, adjusting its outlook following the company's latest quarterly financial results. As of November 6, 2026, the stock is trading at approximately Rs 1,988. While the brokerage maintains an 'Accumulate' rating, the report highlights concerns regarding the sustainability of the company's profit margins in the coming quarters.
Earnings and Margin Trends
Lupin reported an operating profit, or EBITDA, of Rs 19.6 billion for the second quarter of fiscal year 2027, marking an 8% decline compared to the previous year. Analysts at Prabhudas Lilladher noted that the company’s period of peak margins appears to be ending. In recent times, the company benefited from a favorable product mix in the United States and strong sales in its domestic formulations business. However, as some of these supporting factors begin to fade, the brokerage expects profit margins to face pressure.
Product Concentration Risk
A key area for investors to monitor is the company's reliance on a limited number of products. According to the report, roughly 50% of Lupin’s total earnings per share come from three specific products: gTolvaptan, gMirabegron, and gSpiriva. This creates a concentration risk, meaning the overall financial performance is heavily tied to the market success and pricing of these specific drugs.
Competitive Challenges in the U.S.
The U.S. market, which is a major revenue driver for Indian pharmaceutical companies, is seeing heightened competition. The report points out that market conditions for gTolvaptan have already become more challenging. Furthermore, analysts expect the competitive landscape for gMirabegron to intensify significantly starting in the third quarter of fiscal year 2027. Increased competition often leads to pricing pressure, which can erode profit margins for even successful products.
Future Earnings Outlook
Due to these competitive headwinds, the brokerage has lowered its earnings projections for Lupin for the 2028 and 2029 fiscal years by 2% to 5%. Profit after tax is expected to show a downward trend throughout the 2026 to 2028 period. While the company continues to work on its specialized pipeline, including biosimilars and other growth opportunities, the immediate focus for the market will be on how the company manages margin pressure and maintains its base business against rising competition.