The operational performance of Lupin in Q4FY23 was in line with expectations. The company reported revenues of `44.3bn, which grew by 14.1% y-o-y and 2.5% q-o-q. The growth was led by in-line sales in the US and India segments and better than expected API sales and other operating income. US sales at $175m declined by 3% y-o-y and 1% q-o-q due to the impact of price erosion in the base portfolio, which was offset by new launches such as gSuprep. India sales at `14.8bn grew by 9.4% y-o-y and declined by 2.8% q-o-q. The gross margin of 59.6% remained steady q-o-q and improved by 182bps y-o-y due to process efficiencies, which offset the rise in input materials. The Ebitda margin of 13.6% improved by 170bps q-o-q due to lower other operating costs. The PAT at `2.4bn improved by 53.7% q-o-q, aided by higher other income and lower taxes.
Wait continues for gSpiriva: The FDA review goal date (TAD) for gSpiriva (tiotropium inhaler) is shifted to July 2023, without related plant GMP audit (from April 2023), and in August 2023, with plant audit (from July 2023), due to information request from the FDA. As per Lupin, FDA has already cleared PK/PD outcomes and DMF (drug master file) for its gSpiriva filing. It believes its Indore Unit 3 is well-prepared for FDA GMP audit. Lupin hopes for gSpiriva launch in August 2023. Lupin expects a significant pick-up in Ebitda margins helped by gSpiriva.
We expect operating costs to remain elevated in near term on continued R&D spend and S&M spend in India, which may offset benefits from cost saving measures. We look for improved cost optimisation and retain our Hold rating.