Result Flash on Lupin for 4QFY2011

Result Flash on Lupin for 4QFY2011 with a Buy recommendation.

4QFY2011 Financials Snapshot:

Y/E March (`cr)	4QFY2011	3QFY2011	% chg qoq	4QFY2010	% chg yoy
Net Sales	1,512	1,467	3.0	1,286	17.5
Other Income	45	46	(2.4)	54	(15.9)
Operating Profit	269	254	5.7	250	7.4
Interest	8	8	0.5	8	0.1
Net Profit	227	224	1.4	221	3.0

4QFY2011 Financials Actuals v/s Estimates

(` cr)	Actual	Estimates	Variation
Net Sales	1,512	1,489	1.5
Other Income	45	54	(16.1)
Operating Profit	269	277	(3.0)
Interest	7.8	8	(5.1)
Tax	31	32	(2.4)
Net Profit	227	239	(4.8)

4QFY2011 Consolidated Financial Result Highlights-  

·         The Net Sales for the quarter under review for the company stood at `1,512cr (`1286cr) an increase of 17.5% yoy, higher than our estimates of `1489cr. This was backed by the growth in the domestic (grew by 20%) and advanced markets (grew by 10%) formulations segment. For the full year, the net sales increased by 19.5% yoy to `5707cr.

·         The company reported gross margins of 59.3% compared to 62.0% in the same quarter last year. As a result OPM contracted to 17.8% (19.5%) for the quarter, lower than our estimates of 18.6%. For FY2011, the gross margins came in at 60.8% (58.7%), translating to OPM of 18.7% (18.6%).

·         The net profit that came in at `227cr (`220.6cr), increase of 3%, lower than our estimates of `239cr for the quarter. For FY2011, PAT came in at `863cr (`682cr), growth of 26.5%.

·         During the full year, the company filed 21ANDAs and 7 DMFs  with 8 approvals received during the year.

4QFY2011 Consolidated Financial Performance:

Y/E March (`cr)	4QFY2011	3QFY2011	% chg (qoq)	4QFY2010	% chg (yoy)	FY2011	FY2010	% chg (yoy)
Net sales	1,512	1,467	3.0	1,286	17.5	5,707	4,774	19.5
Other income	45	46	(2.4)	54	(15.9)	134	111	20.4
Total income	1,557	1,514	2.9	1,340	16.2	5,841	4,885	19.6
Gross profit	897	897	(0.1)	798	12.4	3,469	2,804	23.7
Gross margins	59.3	61.2		62.0		60.8	58.7
Operating profit	268.7	254	5.7	250	7.4	1,066	887	20.2
OPM (%)	17.8	17.3		19.5		18.7	18.6
Interest	8	8	0.5	8	0.1	32	38	(15.7)
Dep & amortisation	46	41	12.0	41	13.5	171	124	38.1
PBT	260	252	3.3	256	1.7	996	836	19.2
Provision for taxation	31	24	31.4	29	6.5	117	136	(14.0)
Reported net profit	229	228	0.4	226	1.1	879	700	25.7
Less : exceptional items	-	-		-		-	-
MI & share in associates	2	4	(58.2)	4	(64.2)	17	18	(6.7)
PAT after exceptional items	227	224	1.4	221	3.0	863	682	26.5
EPS (`)	5.1	5.0		5.0		19.3	15.3

The stock is currently trading at 19.2 FY2012E and 14.0x FY2013E earnings. We currently have a Buy rating on the stock with a target price of `560. We shall revise our estimates post the management interaction.

Key financials:

Y/E March (Rs.cr)	FY2009	FY2010	FY2011E	FY2012E	FY2013E
Net sales	3,776	4,741	5,707	6,696	8,699
% chg	39.5	25.6	20.4	17.3	29.9
Net profit	502	681	863	976	1,339
% chg	22.8	35.9	26.6	13.1	37.2
EPS (`)	12.1	15.3	19.3	21.9	30.1
EBITDA margin (%)	17.2	18.0	18.7	18.3	18.3
P/E (x)	34.7	27.4	21.8	19.2	14.0
RoE (%)	37.1	36.7	31.8	29.6	32.0
RoCE (%)	20.8	23.3	24.2	22.6	24.0
P/BV (x)	12.2	8.2	6.4	5.1	4.0
EV/sales (x)	4.9	4.1	3.5	2.9	2.2
EV/EBITDA (x)	28.6	22.9	18.3	16.0	12.2

Result Update on PTC India for 4QFY2011

For 4QFY2011, PTC India (PTC) reported net profit growth of 67.2% yoy, aided by strong growth in operating profit. Operating profit for the quarter rose by 263.9% yoy to `34cr on account of higher trading volumes (up 62% yoy) and an increase in trading margins as per new CERC regulations to 7paise from the 4paise, a year back. Going ahead, we expect PTC to witness healthy volume growth due to addition of ~1,300MW and ~4,000MW to its long-term trading (LTT) portfolio in FY2012 and FY2013, respectively.

Operating profit up 263.9% yoy: PTC’s 4QFY2011 net sales grew by 67.2% yoy to `2,079cr. The improvement in the top line was on account of a 62% improvement in volumes to 5,191mn units (MU). The yoy increase in volumes was aided by additional units arising from Lanco Amarkantak (operational since 4QFY2010). Operating profit stood at `34cr (up 263.9% yoy) due to robust growth in trading volumes and higher trading margins. Net profit rose by 141.0% yoy to `34cr during the quarter.

Outlook and valuation: We expect PTC’s top line and bottom-line to witness  25.6% and 20.5 % CAGR respectively CAGR over FY2011–13E. Although, the management clarified in the conference call that the substantial increase in the debtor days at the end of FY2011 is due to the restructuring of discoms of Tamil Nadu and Karnataka, it remains a cause of concern. At the CMP of `89, PTC is trading at 14.4x FY2012E and 13.0x FY2013E earnings. We have a neutral view on the stock.

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