Lupin shares climbed more than 3% to a 52-week high of Rs 2,119.3 on August 9, after global stockbroker JPMorgan increased its rating on the stock after the company's outstanding Q1FY25 results.
JPMorgan upgraded Lupin to an 'overweight' call and boosted its price objective for the company to Rs 2,400, implying a gain of more than 17% from the previous close. JPMorgan's upside potential builds on the counter's last rapid run-up, which yielded gains of more than 90 percent.
JPMorgan justified its moves by stating that it believes Lupin has additional growth potential despite its considerable outperformance over the last year.
Lupin's outperformance was driven by accelerated momentum in its US business, aided by the launch of blockbuster respiratory medicine Spiriva, as well as assistance from several product launches and a steady generic price environment.
Lupin's India business is also returning to double-digit growth, while the company's core business profitability has improved, according to JPMorgan.
Furthermore, JPMorgan believes Lupin has a strong US medicine pipeline, with several important items delivering a 13% revenue CAGR in the US market between FY24 and FY27.
JPMorgan also anticipates Lupin's core business margins to expand by about 400 basis points to 22 percent in FY27, with a core profits CAGR of 29 percent for the pharmaceutical from FY24 to FY27.
Several other brokerages on the Street, like JPMorgan, have an upbeat view of Lupin. Nuvama Institutional Equities is one such firm that upgraded the company to a 'buy' rating, lifting its price objective by nearly half to Rs 2,368.
Nuvama stated that the upgrade was based on forecasts of additional development in Lupin's India and US businesses, notwithstanding the stock's strong rise. It also believes Lupin's India development prospects are quite promising. "US product launches are likely to continue and we highlight Lupin is the only large-cap pharma without cancer drug Revlimid in the US.
Furthermore, the brokerage predicts Lupin will continue to generate profit surprises since US margins have already surpassed the company's average, and a number of fresh launches are expected.
The pharmaceutical recorded a 77 percent year-on-year increase in net profit to Rs 801.3 crore in Q1 FY25. Revenue increased by more than 16% to Rs 5,514.30 crore, led by robust sales in both India and the United States. The company's EBITDA margin also increased dramatically, rising by 527 basis points to a multi-quarter high of 23.3%.
