Lupin gains 1.3% on business transfer agreement with subsidiary

Under the business transfer agreement, the pharma major will move the two active pharmaceutical ingredients (APIs) manufacturing sites at Dabhasa and Visakhapatnam to the subsidiary.

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Shares of Lupin opened 1.3 percent higher on the NSE on September 12. This comes a day after the company announced plans to enter into a business transfer agreement with its subsidiary Lupin Manufacturing Solutions (LMSL). After opening at Rs 1,142.80, the shares rose to Rs 1,173.70 at 9:40 am, nearly 4 percent higher than yesterday’s close.

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Under the business transfer agreement, pharma major Lupin will move the two active pharmaceutical ingredients (APIs) manufacturing sites at Dabhasa and Visakhapatnam to the subsidiary. Additionally, they also plan to carve out select R&D operations, including fermentation, at Lupin Research Park, Pune.

Through this movement, the company expects to get Rs 750-850 crore, which is subject to movement in working capital & other items. The agreement is expected to be entered into in October 2023.

Also read: With roadblocks out of the way, is Lupin finally on the growth path?

The Mumbai-based pharmaceutical major specialises in branded and generic formulations, APIs, and advanced drug delivery systems. The company has 15 manufacturing sites and seven R&D sites across the globe.

Also read: Lupin ties up with Mark Cuban’s Cost Plus Drugs to expand COPD drug access

In an August 2023 report, analysts at Geojit said that while the company had a good Q1FY24 performance and a strong pipeline, they would be retaining their hold rating due to the limited upside potential and overstretched valuation. They have revised the target price to Rs. 1,142, based on 28x FY25E adjusted EPS.

In Q1FY24, the company reported a 28.6 percent year-on-year increase in revenue to Rs 4,814 crore in Q1FY24.  Net profit for the quarter stood at Rs 453 crore against a net loss of Rs 87 crore in Q1FY23.

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