Lupin (500257) Q4 06/07 earnings summary

Executive summary

• FY2006-07 gross sales rose 22% to Rs.20,288.7 Mn; net profit increased 65% to Rs.3,020.6 Mn, with growth spanning finished dosages and APIs.

• Results included Rs.1,143.2 Mn income from the Perindopril IP sale to Laboratoires Servier; recurring research-related income cannot be predicted reliably.

• Exports represented 47% of gross sales; domestic and export sales each grew 22%.

Financial highlights

• Gross sales Rs.20,288.7 Mn (+22%); net sales Rs.19,709.3 Mn; other income Rs.1,866.5 Mn, including Rs.1,143.2 Mn from the Perindopril IP sale.

• EBITDA Rs.4,802.1 Mn, up 60%, at 24% of net sales; PBT Rs.3,967.5 Mn; net profit Rs.3,020.6 Mn, up 65%.

• EPS Rs.37.10 basic and Rs.36.93 diluted, after 1:1 bonus issue; FY2005-06 basic EPS was restated to Rs.22.30.

• Operating cash generated Rs.1,612.2 Mn; capex Rs.1,766.3 Mn, primarily for capacity expansion and the Jammu formulations plant.

Outlook and guidance

• Formulations targeted to reach 60-70% of total business within three years; APIs expected to continue steady growth.

• Advanced Markets formulations growth of 48% in FY2006-07 was expected to accelerate in the current year; Europe filings and launches were positioned as a growth driver.

• Biosimilars were initiated as an R&D focus; substantive contribution was anticipated after three years, while NCE and Innovation Cell products could support licensing over a five-year horizon.

• Management aimed for at least 30% of the product pipeline to comprise complex generics and expected to commercialise more than 50 products filed to date.