Brokerage firm Prabhudas Lilladher has maintained an 'Accumulate' rating on Lupin, setting a target of Rs 2,500. While the company delivered strong Q1 FY27 growth, analysts are cautious about rising competition for key U.S. products that could impact future profitability.
Prabhudas Lilladher has maintained its 'Accumulate' rating on Lupin, setting a target price of Rs 2,500. This update follows the pharmaceutical company's Q1 FY27 financial performance, which showed strong growth across key metrics.
Lupin reported a revenue of ₹8,276.89 crore for the quarter, marking a 32.04% increase compared to the previous year. Profit after tax also climbed, reaching ₹1,416.98 crore, a 16.01% year-on-year growth. A standout figure was the EBITDA, which rose approximately 50% to ₹24.6 billion. This jump was largely credited to a favorable product mix and a recovery in domestic sales, alongside a steady stream of new launches in the U.S. market.
Despite these positive numbers, the brokerage has factored in potential challenges. Lupin currently relies heavily on three key generic products in the U.S.—Tolvaptan, Mirabegron, and Spiriva. These drugs make up a significant portion of the company’s earnings. However, the entry of new competitors for these specific products is expected to create pressure on profit margins through FY27 and FY28.
To account for these risks and higher depreciation costs, Prabhudas Lilladher adjusted its earnings per share estimates downward by 6%. The firm’s price target is based on a valuation multiple of 25 times the projected earnings for FY28. For investors, the company's future growth will likely hinge on the successful launch of complex generics and biosimilars, which are part of its long-term pipeline aimed at offsetting the impact of increased market competition.