Shares of Lupine Ltd fell nearly 7% on the National Stock Exchange on Thursday. Investors are looking very upset with the company’s March quarter results announced late on Wednesday.
Margin performance has been a major source of disappointment. “Adjusting for reversal of litigation-related one-time expenses (Rs 1.2 crore), EBITDA margins rose 1,280 basis points year-on-year to 5.9% (our estimate 13.4%) due to lower Ebitda margins. Operating leverage,” said a report by Motilal Oswal Financial Services Ltd. EBITDA is earnings before interest, tax, depreciation and amortization; an important measure of profitability for companies. One basis point is one-hundredth of a percentage point. Note that Other expenses and employee costs as a percentage of sales increased significantly on a year-over-year basis.
Result: Lupine’s consolidated EBITDA declined by a whopping 68% y-o-y in the fourth quarter 227.6 crores. This comes at a time when revenue has grown by 2.6% 3,883 crore. Lupine derived a significant part of its revenue from North America and India. Revenue from North America declined 5.3% year-on-year while India saw a 5% increase. On the other hand, growth markets and EMEA region registered a growth of 25.6% and 8.6% in revenue, respectively.
Overall, Lupine reported a loss for the quarter. “Lupin has incurred the loss of Gavis IP” 130 crores. Adjusting for the above exceptional items, Lupine reported a loss of 2.4 crore, due to higher tax expenditure,” said analysts at Motilal Oswal.
Commenting on the results, Nilesh Gupta, Managing Director, Lupine said, “The current quarter was challenging with headwinds due to fall in prices in the US, and inflation in input material and freight.”
Taking into account Thursday’s decline, Lupine shares are down 33% so far this calendar year. “We believe that resolution of warning letters and approval of Official Action Indication (OAI) status on plants may trigger in near future with progress on margin front,” said analysts at ICICI Direct Research.