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#Lupin Q3 FY22 concall highlights 💊💊

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1. Revenue for the quarter stood at ₹4160.9 Cr (3.5% growth YoY). This was primarily driven by growth of US business where they saw a strong growth in Albuterol in which they now have a 20% market share.

2. They saw good growth in the majority of the markets including US, India, EMEA and APAC. Gross margins increased by 1.7% QoQ while they were down 0.9% YoY. This is because of higher input costs, sales mix and higher US sales.

About 0.5% of decline in gross margin is due to RM inflation and the rest is due to the sales mix.

3. EBITDA (adjusted for 1 time charge of ₹193Cr) stood at ₹564 Cr was flat QoQ. Adjusted EBITDA was at 13.7% in Q3 vs 14.1 in Q2.
They expect to see meaningful uptick in the business in H2 FY23 and thereafter in FY24 the real growth drivers will kick in with full

impact from their inhalations, injectable and biosimilars portfolio. EBITDA margins are expected to go to 20%+

4. They have completed the acquisition of a bolt-on in Australia called Southern Cross which will reflect in the numbers going forward.

5. They expect gross margin improvement in the base business post FY23 due to some cost optimization measures taken by them which should help them offset price erosion.

6. They are making good progress on contracting with CCGs who are important to drive utilization of the product in the UK. They have not seen much uptake yet due to the COVID surge in the UK since the majority of the CCGs are focused on treating COVID right now.

They expect utilization to ramp up since the UK is opening up now.

7. Albuterol is contributing to growth in volumes and margins which is helping to offset some of the price erosion in other products.

8. They were expecting much higher revenues from the US and the API business which suffered due to the seasonal products like Tamiflu and Cephalosporin

9. Over the past couple of years, they have had issues with OAIs at their facility because of which new launches have struggled. Idle costs have gone up significantly and have really burdened the P&L.

As facilities get clearance from USFDA, operating leverage is expected to kick in.

10. They have 20 exclusive FTFs in the pipeline. In FY23, they will be first to file for Tiotropium and Suprep.

They have currently made 10 filings for the injectables portfolio.
They were expecting higher sales of Oseltamivir during the flu season but that did not happen. There were also some issues in the domestic formulation business in India which has caused them to lower the guidance

11. The Goa plant has been cleared by the USFDA. They are also awaiting inspection of the Pithampur and Tarapur facilities. The agency has not been able to visit due to COVID but they expect them to visit in a few months.

12. They are not focusing on building too many new capacities at this stage. Their focus is going to be more on maintenance capex and bring the Pithampur and Tarapur facilities online. This should not go over ₹500-600 Cr for FY23 and FY24.

13. They launched the diagnostic business in December. They have 3-4 labs at this stage. There will be a major ramp up in Q4 with another 8 labs coming online.