Lupin has rapidly become one of the leading Indian players in global generics, and its domestic business has grown over 20% annually since FY10, outpacing the industry by 8-12ppts. Growth in existing businesses will drive a 24% EPS Cagr over FY12-14CL.
The firm should continue to scale up its annual filings, and could enjoy 8-16% EPS upgrades in FY13/14. Lupin has also led Indian companies in introducing branded products in the USA (through acquisition/in-licensing deals). While this raises risks via potential generics entry, the rewards are also greater.
With a 24% profit Cagr over FY12-14CL and strong balance-sheet and return ratios, we see further upside. CLSA upgraded the stock from Outperform to BUY and lifted our 12-month target to Rs616, based on a sector-average 19x one-year forward PE.
