Motilal Oswal has maintained a 'Neutral' rating on Lupin Limited with a price target of ₹2,500. While the company beat Q1FY27 expectations, the brokerage reduced its profit estimates by 6% due to higher tax and depreciation costs. Investors are weighing strong operational growth against these emerging cost pressures.
Motilal Oswal has kept its 'Neutral' rating on pharmaceutical major Lupin, setting a price target of ₹2,500. This decision follows the company’s first-quarter results for fiscal year 2027, where performance exceeded analyst expectations, yet the brokerage maintained a cautious outlook for the coming quarters.
Lupin reported a strong start to the new fiscal year. Revenue rose by 32% year-on-year to reach ₹82.8 billion, while EBITDA (a measure of core operating profit) grew by 50.1% to ₹24.6 billion. The company’s operating profit margin also improved to 29.8%. This growth was driven by solid performance in both emerging markets and other developed regions, alongside a stable performance from its United States business, which continues to benefit from niche product offerings and volume growth.
Despite these positive operational figures, Motilal Oswal has lowered its earnings estimate for Lupin for FY27 by 6%. This downward adjustment is primarily due to higher-than-anticipated depreciation costs and an increase in the effective tax rate. The brokerage firm values Lupin at 22 times its 12-month forward earnings to arrive at its ₹2,500 target price.
For investors, the 'Neutral' stance reflects a balance between the company's underlying business strengths and potential hurdles. Lupin has enjoyed three years of strong earnings growth, and the brokerage expects a period of consolidation, which may limit the potential for sharp gains in the near term. Additionally, the time taken for new investments and the development of the product pipeline to contribute significantly to the bottom line—often called the gestation period—could weigh on financial performance.
Going forward, market participants will likely monitor whether Lupin can maintain its profit margins while managing these rising depreciation and tax liabilities. The ability of the company to sustain volume growth in its US and emerging market segments while controlling operational costs will be the key factor for future performance assessments.