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  • 06 Apr 2022
  • ICICI Securities

Lupin gets USFDA observations for Tarapur facility

LUPIN - 638 Change: 3.55 (0.56 %)

News: USFDA has closed the inspection at Lupin’s Tarapur manufacturing facility with four observations. The inspection was carried out between March 22, 2022 and April 4, 2022

Views: Tarapur facility was placed under USFDA OAI status from January,2020 after it received three observations during USFDA inspection in September,2019. Tarapur is a fermentation and chemical synthesis based multi-product API manufacturing facility, although management indicated at Nagpur facility procuring newer APIs from Vizag facility and older ones from Tarapur and Dabhasa facility, we believe further observations post Lupin's remediation measures reflect poorly and extended USFDA compliance issues at multiple facilities are affecting Lupin's utilisation of assets for the US

Impact: Negative

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Miss on estimates, Margins below-par

Revenues grew 3% YoY to Rs. 3883 crore, wherein domestic formulations grew 5% YoY to Rs. 1351 crore. US revenues de-grew 5% YoY to Rs. 1416 crore while South Africa business remained flat YoY to Rs. 210 crore and RoW markets expanded 35% YoY to Rs. 470 crore. API de-grew 14% YoY to Rs. 220 crore (I-direct estimate: Rs. 268 crore). EBITDA margins was down 1287 bps YoY at ~5.8% against I-direct estimate of 13.4%. EBITDA de-grew 68% YoY to Rs. 226 crore (I-direct estimate: Rs. 539 crore). Lupin posted adjusted loss of Rs. 525 crore (I-direct estimate was profit of Rs. 245 crore) vs. adjusted profit of Rs. 460 crore in Q4FY21. Delta vis-à-vis EBITDA was mainly due to higher interest, depreciation and tax expense along with lower other income in this quarter. The board of directors recommended a dividend of Rs. 4 per equity share

19-May-2022 10:00