Lupin Q2 FY27 Results (NSE: LUPIN)
Signal: Margin pressure
The read
The margin arc has inflected down after the prior quarter: revenue still grew 14.0% YoY to 77855 million, but EBITDA margin contracted 770bps YoY to 27.9% and 350bps QoQ as employee and manufacturing costs rose 25.2% combined, while U.S. sales declined 12.1% sequentially.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹7,827.3 Cr | 11.1% | -5.4% |
| EBIT | ₹1,685.3 Cr | -20.3% | |
| Net profit | ₹1,155.3 Cr | -21.8% | |
| EBIT margin | 27.9% |
P&L walk
Revenue from operations grew 11.1% YoY to 78273 million, but EBITDA declined 10.7% to 21712 million and margin fell 770bps to 27.9% as employee and manufacturing costs rose faster than sales, while lower other operating income and reduced forex support also weighed.
Segments
Other Developed Markets was the primary growth engine, with sales up 45.7% YoY to 11823 million, while Emerging Markets dragged with a 3.5% decline to 8908 million; U.S. sales grew 9.3% to 30202 million but fell 12.1% sequentially.
Key positives
- Other Developed Markets sales grew 45.7% YoY to 11823 million, while India sales rose 14.7% to 23836 million.
- API sales increased 20.2% YoY to 3086 million, and Lupin received 4 ANDA and 1 NDA 505(b)(2) approvals during the quarter.
- Net cash was 33490 million and quarterly R&D investment increased 18.4% YoY to 6181 million, equal to 7.9% of sales.
- Gross margin improved 90bps YoY to 74.2% as material cost declined to 25.8% of sales from 26.7%.
Key concerns
- EBITDA fell 10.7% YoY to 21712 million and EBITDA margin compressed 770bps to 27.9%, reversing the recent margin expansion trend.
- Employee cost rose 28.8% YoY to 14236 million and manufacturing and other expenses rose 23.2% to 24381 million, both materially ahead of revenue growth.
- U.S. sales declined 12.1% QoQ to 30202 million after growing 9.3% YoY, making the U.S. trajectory the key near-term swing factor.
- Depreciation, amortization and impairment rose 53.4% YoY to 4859 million, causing EBIT to decline 20.3% to 16853 million.
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