News
Pharma major Lupin has announced a strategic acquisition of the Huminsulin brand in India from Eli Lilly. This move aims to enhance Lupin’s diabetes portfolio significantly. Huminsulin, a vital drug used in managing Type 1 and Type 2 diabetes mellitus, was previously marketed by Lupin through an agreement with Lilly India. The acquisition aligns with Lupin’s commitment to providing high-quality, affordable healthcare solutions.
Nilesh Gupta, Managing Director of Lupin, highlighted the strategic importance of this acquisition, stating it would allow the company to offer a broader range of human insulin options to patients. Diabetes management remains a critical segment for Lupin, which also excels in cardiology and respiratory therapies.
The Indian healthcare sector’s rapid growth and increasing cases of diabetes present a lucrative opportunity for Lupin to strengthen its market position.
Fundamental Analysis
Company Essentials
- Market Cap: ₹ 1,05,374.21 Cr.
- Enterprise Value: ₹ 1,05,253.70 Cr.
- No. of Shares: 45.62 Cr.
- P/E Ratio: 35.15
- P/B Ratio: 4.79
- Dividend Yield: 0.35%
- Promoter Holding: 46.96%
Financial Strength
- Profit Growth: 447.05% (YoY)
- Sales Growth: 30.27%
- ROE: 12%
- ROCE: 14.33%
- Debt-to-Equity Ratio: 0.00 (Virtually debt-free)
- Operating Cash Flow: ₹ 2,504.13 Cr.
Strengths
- Excellent profit growth of 22.72% over the past 3 years.
- Significant debt reduction by ₹ 595.33 Cr.
- Strong liquidity position with a current ratio of 2.51.
- Efficient cash flow management with CFO/PAT at 1.81.
- Healthy interest coverage ratio of 50.42.
Limitations
- Revenue growth of 9.88% over the past 3 years is subpar.
- ROE of 4.44% in the past 3 years is underwhelming.
- Contingent liabilities amount to ₹ 4,029.78 Cr.
Technical Analysis
Below is the daily chart for Lupin:
Observations:
- EMA Cross: The 9-day EMA has crossed above the 26-day EMA, signaling bullish momentum.
- Support Levels: ₹ 2,100 and ₹ 2,140.
- Resistance Levels: ₹ 2,320 and ₹ 2,400.
- Volume: High trading volumes indicate strong investor interest.
- Trend: Lupin has been in a clear uptrend, supported by strong fundamentals.
Short-Term Trade Plan
- Buy Zone: Enter around ₹ 2,200 to ₹ 2,250.
- Target: ₹ 2,400.
- Stop-Loss: ₹ 2,150.
- Rationale: The EMA crossover and strong volume support short-term bullishness. A quick momentum-driven trade can yield profits.
Long-Term Trade Setup
- Buy Zone: Accumulate on dips below ₹ 2,100.
- Target: ₹ 3,000 over the next 12-18 months.
- Stop-Loss: ₹ 1,900.
- Rationale: Lupin’s strategic acquisitions and robust growth in the diabetes segment position it as a strong long-term play in the healthcare sector. The Indian healthcare market’s expansion further supports this outlook.
Conclusion
Lupin presents a compelling investment opportunity backed by strong fundamentals and technical indicators. The recent acquisition of Huminsulin aligns with its strategy to dominate the diabetes segment, ensuring sustainable growth. For investors seeking exposure to the healthcare sector, Lupin remains an attractive choice.
Stock Market Analysis in India continues to highlight Lupin as a resilient player with promising growth potential.
Disclaimer
This blog is for informational purposes only and does not constitute financial advice. Always consult with a qualified financial advisor before making investment decisions. The author is not responsible for any losses incurred based on the information provided here.