Motilal Oswal Suggests Selling Of This Pharma Stock, Has Declared A 200% Dividend

Leading brokerage firm Motilal Oswal has suggested investors sell Lupin shares because it believes that, the stock price will fall by nearly 15 per cent based on its valuation. Despite the company reporting a profit after tax (PAT) of Rs 2.6 billion, almost up, four times growth, year on year(YoY) due to higher other income and a lower tax rate for the 4QFY23, valuations indicated a steep decline in the stock price.

Lupin delivered a better-than-expected 4QFY23 performance, led by healthy sales growth across segments and some benefits from the PLI scheme. The revenue grew 14per cent YoY to Rs 44.3 billion. (est. Rs 40.4 billion). API sales jumped 46per cent YoY to Rs 3.2 billion (7 per cent of sales). The gross margin expanded 250bp YoY to 60.5per cent due to a better product mix.

The potential approval for g-Spiriva is further delayed by a few months due to certain information requests from the USFDA.

Motilal Oswal has raised its earnings estimates for FY24 and FY25 by 4per cent and 2 per cent, factoring in a better outlook in API/Europe segments, improving operating leverage, and an adverse impact of competition in the diabetes portfolio in the domestic formulation (DF) segment. But even after factoring in potential business prospects from a niche launch like g-Spiriva, the return ratio would be just 10per cent. We value Lupin at 22x 12M forward earnings to arrive at a target price of Rs 640 per share.

Dividend details of Lupin Ltd
Lupin has also recommended a dividend of 200 per cent i.e. Rs 4/- per equity share of the face value of Rs 2 each for the year ended March 31, 2023, subject to the approval of Members at the ensuing Annual General Meeting. The total outflow would be Rs1820.1 million. No record date or book closure details were shared by the company.

Share price movement of Lupin Ltd
The share price of Lupin Ltd closed upward by 2.02 per cent to Rs 764.90 over the previous days closing. In the last one year, the share price has rallied by 10.17 per cent but in three years the price has declined by 9.96 per cent. Its 52-week high is at Rs 788.90 per share and the 52-week low is at Rs 583.05 per share.

Disclaimer
The stocks have been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.